Why is Reliance Retail on a partnership spree with global luxury brands?

Mukesh Ambani’s Reliance Retail has been on a partnership spree with leading international luxury brands from clothing to beauty to cafes since the past 3 years. Most of these partnership deals give Reliance Retail an exclusive rights to market & sell their products in India.

Reliance Retail has exclusive partnerships with over 4 dozen international luxury brands which entitles it the sole right to sell their products in India. Some of its exclusive partnerships include Gap (US), Balenciaga (France), Emporio Armani (Italy), Burberry(UK), Valentino (Italy) and several others.

But why is Reliance entering into such partnerships?

With the rise in income the consumerism of Indians especially the young generations are increasing tremendously. Their aspirations & demand for luxury has skyrocketed and this is just the start. Over the next 20-30 years the demand for global luxury brands – clothes, handbags, beauty products, perfumes, shoes and accessories will boom.

Although the current luxury market size of India is just around $5 bn it is expected to grow gradually over the next 20-30 years with the rise in India’s per capita income and increased exposure to the western worlds due to digitization.

Mukesh Ambani wants to tap into this vast reservoir of opportunities. Mukesh Ambani has always been known for planning something in decades not months and years. His every venture has a multidecade approach and vision for the longer haul and not just dabbling for the shirt term 2-3 years.

If you look at all his undertakings it must have been atleast a decade before it starts giving fruits. Until then Mukesh patiently builds and invests in it in the background without any noise. Jio is a prime example which was started way back in 2010 and it was launched in 2016 and started yielding results by 2020. Today it is India’s largest telecom service provider.

The same is the story with Reliance Retail which was started in 2006 and kept bleeding billions of dollars for years. But today, after almost 2 decades it is the country’s top retail chain with a valuation of $100 bn and an annual profit of $1.12 bn.

In tune with this goal of tapping into the unexplored reservoir of India’s growing luxury market Reliance Retail has also launched Jio World Plaza, a luxury shopping mall spread over 7,50,000 sq ft area in Mumbai.

And accept it or not but when it comes to apparels the international brands have a greater appeal to the Indian consumers vis-a-vis their national brands especially in the luxury category. Thats why Reliance Retail is bringing the foreign luxury brands to India.

And in the case of such luxury goods sales Reliance doesn’t have to essentially do anything. Thye don’t have to spend billions on demand creation as the demand already exists neither do they have to spend billions on branding and marketing as these international brands are already well known amongst the Indian elites who are their target audience and plus they are eagerly waiting to buy these products. The only thing Mukesh Ambani has to do is wait patiently and he has ample of it which he has demonstrated through Jio and Reliance Retail. He is in no hurry as he is not starved for cash. So these deals are huge victories for Mukesh Ambani as he can easily cash on their years of branding and reputation.