Reliance Retail plans to expand online business and dark stores in FY27, CFO Dinesh Taluja lays out three-year roadmap
Reliance Retail plans to ‘rapidly’ scale its online business, expand dark stores and strengthen omni-channel capabilities, CFO Dinesh Taluja told PTI. The company plans to evaluate markets and focus investments according
Reliance Retail Ventures (RRVL) plans to ‘rapidly’ scale its online business, expand dark stores and strengthen omni-channel capabilities, CFO Dinesh Taluja said in the company's earnings call today. The company plans to evaluate markets and focus investments accordingly, he added.
Taluja added that RRVL expects these investments to translate into higher margins and earnings growth and outlined a three-year roadmap, PTI reported. He said the retailer 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.
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,” he added.
Expect to convert scale into value
By FY28 and FY29, the company expects to convert scale into value by increasing repeat rates, basket size and customer lifetime value. In the next three years, Reliance Retail has an ambition of “2× Operating EBITDA”, Taluja stated. EBITDA refers to earnings before interest, taxes, depreciation and amortisation.
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.
Reliance Retail has set targets
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% year-on-year (YoY).
Fashion arm AJIO Rush in ‘early stages of scaling up’
He said Reliance Retail's fashion quick-commerce offering, AJIO Rush, has also recorded strong momentum, with order volumes rising 136% 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% YoY 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.
(With inputs from PTI)
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