What’s in store for retailers? Aggressive expansion
After shutting hundreds of unviable stores over the last two years, top ten listed retailers such as Reliance Retail, Arvind Fashions and V-Mart are entering a new phase of aggressive and strategic expansion focused on profitability, signalling a recovery in demand. These firms including Aditya Birla Fashion & Retail (ABFRL), Spencer’s Retail and Shoppers Stop said their “clean up” phase is over, and they would apply strict operational benchmarks and other criteria to ensure the new stores remain profitable. Reliance shut more than 2,100 underperforming stores across grocery and fashion formats last financial year to cut costs and improve profitability amid a slowdown in consumer demand, particularly in mass and mid-range segments and in smaller towns. Arvind and Aditya Birla Fashion closed 70 and over 200 stores, respectively, while Spencer’s shut 47. Shoppers Stop and V-Mart closed nine large-format department stores each. Many stores that retailers opened during the post-pandemic surge in demand across segments from clothes to cars had stopped making money as ‘revenge shopping’ settled and consumers cut back on discretionary spending amid persistent inflation in food and other essentials. 
“We have also shut down because some stores were too small, not strategic. Their sell-throughs were not good, discounting was higher, and we took a tough decision because our growth has to be profitable,” Shailesh Chaturvedi, MD of Arvind Fashions, told investors recently. “But most of this cleaning up is behind us.” Now these retailers are upbeat on new store openings, with focus on bigger outlets in larger cities. Arvind—which owns the rights for Calvin Klien, US Polo, and Tommy Hilfiger brands among others in India—said it will add 150,000 square feet of retail space in FY26, higher than 120,000 sq ft in FY25. Aditya Birla Fashion—which owns Pantaloons fashion chain and brands such as Louis Phillipe, Van Heusen and Allen Solly—said it will open 300 new brand stores and 20 Pantaloon outlets this year.Learning From Past MistakesAditya Birla Fashion had shut over 190 brand stores and 15 Pantaloons in FY25. “While we rationalised stores which were not in line with our strategy, the new stores that we are opening obviously are with a stronger set of guardrails,” said Sangeeta Tanwani, chief executive officer of Pantaloons. She said the brand will opt for “larger stores, focused largely on metros and mini metros and class 1 towns.” Shoppers Stop plans to open seven stores and 60 value fashion stores in FY26, having already done “bulk of our store closures,” its managing di- rector Kavindra Mishra said. “We are also at times hampered by the availability of the right location, right mall. So, I think fundamentally, we are not limiting it (store expansion),” he added. An ET analysis of a dozen top listed quick-service restaurant (QSR) cha- ins, apparel and grocery retailers showed collective additions of an average of ten stores per day in 2023. However, the number of new stores per day was just three on average in 2024, as consistent low sales growth pushed retailers to shutter several stores.This helped improve profitability. For instance, Reliance Retail’s earnings before interest, taxes, depreciation, and amortisation (Ebitda) expanded 20 basis points last fiscal, according to its chief financial officer Dinesh Taluja. Also, all its operating metrics including number of transactions and registered customers grew in double digits. “On the store side, we continue to add new stores while we weeded out all the stores which did not make sense,” Taluja told analysts during the firm’s post-fourth quarter earnings call. “We are…pretty much done with the streamlining that we had started during the year,” he added. Some retailers said they will opt for calibrated store expansion, without many store closures like earlier. “We are trying to learn from our past mistakes because we have closed down a lot of stores,” said Lalit Agarwal, chairman of V-Mart. “There is a list of the learnings that we have and how do we not make those mistakes and then open those stores which have a higher rate of success.” V-Mart, which largely operates in small towns, said it will be economical in property selection and conservative in rentals. Spencer's said it has set fairly high benchmarks for evaluating any investment recommendations for opening stores and wants all stores to be profitable in the first six months. “We have embarked upon focusing on geographies and driving store level profitability… That's something which we do not want to slip by opening stores and then incurring losses in the new stores,” said Anuj Singh, CEO of Spencer's Retail.Clearly, as they start expanding their networks once again, Indian retailers are careful not to repeat past mistakes. They are pursuing sustainable and strategic growth, and not reactive expansion.
“We have also shut down because some stores were too small, not strategic. Their sell-throughs were not good, discounting was higher, and we took a tough decision because our growth has to be profitable,” Shailesh Chaturvedi, MD of Arvind Fashions, told investors recently. “But most of this cleaning up is behind us.” Now these retailers are upbeat on new store openings, with focus on bigger outlets in larger cities. Arvind—which owns the rights for Calvin Klien, US Polo, and Tommy Hilfiger brands among others in India—said it will add 150,000 square feet of retail space in FY26, higher than 120,000 sq ft in FY25. Aditya Birla Fashion—which owns Pantaloons fashion chain and brands such as Louis Phillipe, Van Heusen and Allen Solly—said it will open 300 new brand stores and 20 Pantaloon outlets this year.Learning From Past MistakesAditya Birla Fashion had shut over 190 brand stores and 15 Pantaloons in FY25. “While we rationalised stores which were not in line with our strategy, the new stores that we are opening obviously are with a stronger set of guardrails,” said Sangeeta Tanwani, chief executive officer of Pantaloons. She said the brand will opt for “larger stores, focused largely on metros and mini metros and class 1 towns.” Shoppers Stop plans to open seven stores and 60 value fashion stores in FY26, having already done “bulk of our store closures,” its managing di- rector Kavindra Mishra said. “We are also at times hampered by the availability of the right location, right mall. So, I think fundamentally, we are not limiting it (store expansion),” he added. An ET analysis of a dozen top listed quick-service restaurant (QSR) cha- ins, apparel and grocery retailers showed collective additions of an average of ten stores per day in 2023. However, the number of new stores per day was just three on average in 2024, as consistent low sales growth pushed retailers to shutter several stores.This helped improve profitability. For instance, Reliance Retail’s earnings before interest, taxes, depreciation, and amortisation (Ebitda) expanded 20 basis points last fiscal, according to its chief financial officer Dinesh Taluja. Also, all its operating metrics including number of transactions and registered customers grew in double digits. “On the store side, we continue to add new stores while we weeded out all the stores which did not make sense,” Taluja told analysts during the firm’s post-fourth quarter earnings call. “We are…pretty much done with the streamlining that we had started during the year,” he added. Some retailers said they will opt for calibrated store expansion, without many store closures like earlier. “We are trying to learn from our past mistakes because we have closed down a lot of stores,” said Lalit Agarwal, chairman of V-Mart. “There is a list of the learnings that we have and how do we not make those mistakes and then open those stores which have a higher rate of success.” V-Mart, which largely operates in small towns, said it will be economical in property selection and conservative in rentals. Spencer's said it has set fairly high benchmarks for evaluating any investment recommendations for opening stores and wants all stores to be profitable in the first six months. “We have embarked upon focusing on geographies and driving store level profitability… That's something which we do not want to slip by opening stores and then incurring losses in the new stores,” said Anuj Singh, CEO of Spencer's Retail.Clearly, as they start expanding their networks once again, Indian retailers are careful not to repeat past mistakes. They are pursuing sustainable and strategic growth, and not reactive expansion.
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