Reliance Retail to make value store foray with Yousta

The country’s largest organised retailer, Reliance Retail, is working on a new value retail store format called Yousta. The move will pit Reliance Retail directly with Trent’s Zudio, Landmark Group’s Max Fashion and Shoppers Stop’s Intune, informed sources have told Fe, as growth prospects beckon in the category.

Reliance Retail will roll out the new Yousta stores of around 5,000-10,000 sq. ft. in size in cities such as Hyderabad, Delhi and Mumbai in the initial phase, the sources said.

Pricing will be competitive at under Rs 500 per unit, targeted at youth, children and families.

A gradual ramp-up of stores across more metros and cities will happen in the months ahead, as Reliance Retail is looking to take store count of Yousta to around 200-250 over the next few years. The retailer is speaking to malls and high streets across cities to lease space for the new format, persons in the know said. Executives at Reliance Retail were not immediately available for comment.

However, some experts see Reliance Retail’s move as a belated acknowledgement of a segment that constitutes nearly 90% ($45 billion) of the estimated $50 billion domestic fashion market. The premium end is pegged at 10% ($5 billion) of the domestic fashion market.

“Much of the attention of apparel retailers in recent years has been at the top-end of the fashion market. While affluence at the top-end is high, the space has also become crowded with local and international brands,” says Devangshu Dutta, chief executive officer at Gurugram-based retail consultancy Third Eyesight.

“The larger value retail market has consumers in the middle and lower middle class who while being conscious of their budgets are also aspirational,” he says. “With the right product and pricing, volume sales can be significant in this segment,” he says.

Reliance Retail has an existing value retail format called Reliance Trends, which has nearly 2,500 stores across the country. However, the company has been looking to broaden its appeal in the category with more store formats, sector experts said. Yousta is expected to fill that gap, they say.

“The value retail market has long-term growth potential because there are number of consumers who are moving from unbranded to branded products. They are looking at affordably-priced branded goods, which value retailers can cater to,” says Aliasgar Shakir, retail analyst at Mumbai-based brokerage Motilal Oswal.

Some experts say that the discretionary slowdown in the marketplace has pushed apparel retailers to look at the value retail space more closely.

“Intune is a ‘Fashion For All’ format, which is one of our strategic initiatives to cater to young families,” Venu Nair, MD & CEO, Shoppers Stop, said in a recent investor call.

Nair admitted on the earnings call that the apparel segment in general has been witnessing moderation and that the value retail foray could help the company tap into the growing trend for affordable fashion and lifestyle products.

Trent’s Zudio and Max Fashion have big plans for the category. At Trent’s FY23 annual general meeting held recently, the company said it would open 200 stores of Zudio in FY24, much higher than estimates of analysts. In FY23, Trent had opened 117 Zudio outlets taking the total store count of the brand to 352.

Max Fashion will add 100 stores in the next one year, top officials at the company said, taking its total outlet count to close to 600.