Mukesh Ambani, Asia's richest man faces a significant challenge in the retail sector, where his Reliance Industries is struggling to capture the fast-fashion market with the Tata Group currently outperforming in this space.
Trent Ltd., the retail arm of the $165 billion Tata Group, has seen its sales triple compared to pre-pandemic levels, with net profit soaring 12 times. The company's fast-fashion brand, Zudio, has become increasingly popular among young consumers due to its trendy and affordable clothing.
This success poses a problem for Ambani. Reliance Industries has invested more than $2 billion into its retail division over the past year. Now his primary goal is to lead this unit to a successful initial public offering (IPO) or spinoff, but to do so, he needs to dominate the fast-fashion market.
To strengthen his position, Ambani has turned to Chinese e-commerce giant Shein. Shein, which was banned in India in 2020 due to border tensions between India and China, is reportedly making a comeback with operations, platform, and data under Reliance's control. This partnership could be a critical asset for Ambani as Shein prepares for its own IPO.
In an effort to compete with Zudio, Ambani launched Yousta, a store where everything is priced under Rs 999 ($12). However, the results have yet to meet expectations. Reliance Retail’s year-on-year sales growth in the June quarter was just 8%, driven mainly by sales of air-conditioners, refrigerators, TVs, and groceries, while the fashion and lifestyle segment underperformed due to "tepid discretionary demand."
Despite Reliance Retail's significant size, with revenue exceeding $36 billion, Trent's $1.5 billion-a-year franchise is growing rapidly, posting a 56% increase in sales last quarter.
