In outlining a three-year strategy, Reliance Retail CFO Dinesh Taluja mentioned that the company will invest in the infrastructure of JioMart and broaden its omni-channel presence across various platforms, despite the pressure on margins due to increasing investments in technology and dark stores.
“We are aiming to grow our online businesses significantly this year. We will enhance our dark store network, expand omni-channel platforms, and develop JioMart,” Taluja stated during the company’s earnings call.
Additionally, the focus will be on enhancing operational metrics such as availability, speed, and reliability, with a tailored approach for each market to achieve positive unit economics.
“In each market, we should have a defined path to positive unit economics. Therefore, we are assessing each market and strategically directing our investments,” Taluja elaborated.
By FY29, the company anticipates converting its scale into value by boosting repeat rates, increasing basket size, and enhancing customer lifetime value. Over the next three years, Reliance Retail aims for “2× Operating EBITDA.”
EBITDA stands for earnings before interest, taxes, depreciation, and amortisation.
According to Taluja, the scale established this year is expected to generate value through improved margins and stronger cash flow over the next two years as customer acquisition, repeat purchases, and basket sizes grow.
The company also intends to enhance profitability through a higher proportion of private labels, increased monetisation opportunities, and more marketplace revenue.
“We will leverage these factors to improve economics, which will start showing significant results in the figures over the next two years,” he mentioned.
Taluja indicated that the current year will focus on building a robust foundation while pursuing disciplined growth, prioritizing customer quality over merely chasing high volumes.
The company has established internal targets around metrics like order density at dark stores, repeat purchase rates, fulfilment costs, and contribution margins, calibrating investments based on performance.
“We plan to grow rapidly, but we will also monitor the quality of the business, not just the quantity,” he said.
As the advantages from increased order density, better product mix, productivity improvements, faster inventory turns, and monetisation initiatives start to manifest, Reliance Retail anticipates enhanced returns on capital, with EBITDA and cash generation accelerating in the upcoming years, Taluja added.
The company is also seeing strong momentum from its omni-channel strategy. According to Taluja, omni-channel customers typically spend around 2.7 times more than purely offline customers, with their spending increasing by 20-25% year-on-year.
He mentioned that Reliance Retail’s fashion quick-commerce service, AJIO Rush, has experienced substantial growth, with order volumes surging 136% sequentially in the last quarter.
Taluja noted that this service, which provides fashion deliveries within two to four hours, was launched just a few quarters ago and is still in its early scaling phase.
Currently, AJIO, AJIO Rush, and the store network are being managed as a unified omni-channel offering. AJIO Luxe now provides access to over 1,000 brands, expanding its reach into premium consumption, according to an earnings presentation by Reliance Industries.
Moreover, the average daily digital orders more than doubled, increasing by 116% year-on-year in the last quarter.
Reliance Retail stands as the largest quick commerce entity in the country, operating through its digital retail division, JioMart, which boasts extensive geographical coverage.
JioMart employs a hybrid model of over 3,100 physical stores and more than 600 dark stores to service more than 1,200 cities and encompass 5,100 pin codes.
