Vector Consulting Group

Retail Expansion Picks Up, But Profitability Remains a Challenge Leading retailers such as Reliance Retail, Aditya Birla Fashion and Retail, Shoppers Stop and Arvind Fashions have resumed store expansion in FY26 after muted growth in FY24–FY25. Improved urban demand, income tax and GST cuts, and easing interest rates have supported consumption recovery. However, a study by Vector Consulting Group highlights that 28–40% of a retailer’s store network remains unprofitable. Inventory concerns persist, with about 48% of mobile and consumer electronics inventory remaining beyond its optimal selling window. Apparel and footwear report ~24% excess inventory, home & furniture 40%, and jewellery & personal wear 43% — compressing margins and shortening full-price selling periods. Retailers often expand SKU portfolios and pursue bulk buying, further increasing inventory risks. Consulting firms suggest a hyper-local strategy may improve profitability by leveraging location-specific advantages.