Reliance Retail Ventures Ltd to scale online business this year

Reliance Retail Ventures Ltd (RRVL) will ‘rapidly’ scale its online business, expand dark stores and strengthen omni-channel capabilities, as the retailer expects these investments to translate into higher margins and earnings growth, a top company official said.

Outlining a three-year roadmap, Reliance Retail CFO Dinesh Taluja said the company will invest in the infrastructure of JioMart and omni-channel reach across platforms, even as margins have come under pressure from rising technology and dark-store investments. “We are looking at growing our online businesses pretty rapidly during this year. We will expand dark stores. We will grow our omni-channel platforms. We will grow JioMart,” Taluja said in the company’s earnings call.

Besides, it will also focus on improving the operational metrics around availability, speed, and reliability with a market-by-market focus on achieving positive unit economics.

“Each market, the unit economics, we need to have a clear path to positive unit economics. Accordingly, we are evaluating each and every market and focusing our investments in that manner,” Taluja said.

By FY28 and FY29, the company expects to convert scale into value by increasing repeat rates, basket size and customer lifetime value.

According to him, the scale being built this year is expected to create value through improved margins and stronger cash generation over the next two years as customer acquisition, repeat purchases and basket sizes improve.

The company also plans to improve profitability through a higher share of private labels, increased monetisation opportunities and greater marketplace income.

“We will use all these levers to improve economics, which will start reflecting meaningfully in the numbers over the next two years,” he said.

Taluja said the current year will be focused on laying a strong foundation while pursuing disciplined growth, with emphasis on customer quality rather than merely chasing volumes.

The company has set internal targets around metrics such as order density at dark stores, repeat purchase rates, fulfilment costs and contribution margins, and will calibrate investments based on performance.

“We will grow quite quickly, but we will also look at the quality of business, not just the volume,” he said.

As benefits from higher order density, better product mix, productivity gains, improved inventory turns and monetisation initiatives begin to accrue, Reliance Retail expects returns on capital to improve, with EBITDA and cash generation accelerating in the coming years, Taluja added.

The company is also witnessing strong traction from its omni-channel strategy. According to Taluja, omni-channel customers spend about 2.7 times more than pure offline customers, while their spending has grown 20-25 per cent year-on-year.

He said Reliance Retail’s fashion quick-commerce offering, AJIO Rush, has also recorded strong momentum, with order volumes rising 136 per cent sequentially during the quarter.

Taluja noted that the service, which offers fashion deliveries within two to four hours, was launched only a few quarters ago and is still in the early stages of scaling up.

Now AJIO, AJIO Rush and the store network are being managed as one omni-channel proposition. AJIO Luxe now offers 1,000+ brands, expanding participation in premium consumption, said an earnings presentation of Reliance Industries.

Moreover, average daily digital orders more than doubled, growing 116 per cent year-on-year during the quarter.

Reliance Retail is the largest quick commerce player in the country, which operates through its digital retail arm JioMart, and has a wide geographical coverage.

JioMart utilises a hybrid model of 3,100+ physical stores and 600+ dark stores to service more than 1,200 cities and cover 5,100 PIN codes.