Brian Bade, who joined as new chief executive officer of Reliance Digital, one of the 19 formats of Reliance Retail, has set high targets for the format and has chalked out a five-year business model. With his entry in September, he has taken a lot of initiatives, one being working on the detailing of the store. More importance has been given to the experience of a digital store. The expansion, too, has not been slow. Bade spoke to FE?s Shubham Batra about the roll out of more stores and the possibility of an acquisition in future as part of its growth strategy. It has set an ambitious target of clocking Rs 700 crore in revenues by the end of FY11.

The company has chalked out a five-year business model. What is the strategy there?

Reliance Digital is currently remodeling its stores and aligning overall operations with its new customer-value-proposition ? We bring technology to life for you ? and provide customers with well-differentiated value & experience. Reliance Digital would focus on top Indian metros & satellite cities in Phase I for the next two years, followed by roll out in next 150 cities in Phase II.

Can you elaborate on the expansion plans for Reliance Digital?

There are a number of stores going to be rolled out in next one year in cities like Mumbai, Hyderabad, Bangalore, Chennai, Ahmedabad, Vadodara, Ludhiana and Jaipur. These stores will be company owned and managed. We are mainly divided in three formats of stores under Reliance Digital. First, we have the Digital format (9,000 – 20,000 sq ft stores) for which we are opening eight more stores, to add to the current 27. Second, is the iStore, which resells Apple products. We have plans to roll out two more of them taking the count to 19. And lastly, we have the Digital Express format (2,000-3,000 sq ft stores), which will see an addition of another 13 stores in next one year. With around 150 brands and around 1,400 stock keeping units (SKUs), Reliance Digital is investing heavily on expansion. We hire 50 people per store, on an average, hence, we are likely to hire around 1000 people for in next one year.

With other retailers bullish on the e-commerce business, are you going to focus on the same for further growth?

We are making adequate investments as far as our e-commerce business is concerned since we have recently launched our website. As of today, we don?t have adequate infrastructure, be it IT solutions or the logistics, to be fully operational. But this project is likely to take off soon. Although, currently, we do put up offers available in the store on our website. There is a ‘Deal of the Day’, that is updated in the website on a regular basis.

To garner better margins, retailers are developing their own labels. Where do you stand on that front?

We have a plan to launch our private labels, but it would not be now. First, we want to build a strong brand equity and bring the current business in place. Our private brands are likely to be 20% cheaper than other international and national labels. We might see the private labels being launched by the end of next year. The average ticket size at the Digital stores is around Rs 8,000.

With so much expansion, do we expect the advertising and sales promotion to rise?

True, we are expanding and hence, we would require to spend heavily on activation and promotions. We have a 360 degree marketing campaign designed. The company for the current and the subsequent year is going to spend 3-7% of the sales, on ASP. The topline for the financial year 2011 is expected to be around Rs 650-700 crore. We are growing 100% year-on-year in sales, with like-to-like around 10-13%.