Reliance Retail focuses on disciplined JioMart expansion targets profitability from FY28

New Delhi, Oct 30 (PTI) Country's leading retailer Reliance Retail Ventures Ltd (RRVL) is expanding its dark store network, improving delivery speeds and deepening its presence in smaller cities, while maintaining a sharp focus on unit economics and profitability, said a senior company official on Friday.

     The company is prioritising sustainable growth with investments in dark stores, customer acquisition and margins expected to start contributing positively to profitability from the next financial year, as per its roadmap, said Reliance Retail CFO Dinesh Taluja during an earnings call.

     It is continuing to scale up its quick commerce operations and build capabilities to respond to evolving market realities, with a focus on developing a hyperlocal network spanning supply chain and technology.

     "We are investing right now to build scale in online businesses," said Taluja, adding that the company is "investing in capabilities to improve our availability, improve the speed of delivery, improve reliability".

     However, he also said it will grow its scale in e-commerce and quick-commerce with "balanced unit economics". It is maintaining a sharp focus on profitability, including shutting down large-footprint stores that are not performing, while expanding its dark-store network.

     In the grocery business, where online revenue has 42 per cent growth in Q2/FY27, a "scale-up of hyperlocal and online visible in revenue mix", it said.

     Reliance Retail added 303 new stores in its sales network, with a net reduction of 222 stores after accounting for the closure of unproductive stores.

     It has a "ruthless focus" on profitability with shut down on non performing large footprint stores, time lag between this.

     "The focus will be on unit economics and not just the number of orders vanity or the reach vanity metrics. The growth will be disciplined with the economics making sense. Wherever the economics don't make sense, we will not grow, and we'll continue to expand our dark store network," he said.

     Unlike several online-first competitors that are investing heavily to establish standalone infrastructure, Reliance Retail has an advantage in leveraging its existing physical store network to support online deliveries, he said.

     The company has a presence across more than 5,000 stores and operates in over 1,000 cities, providing it with a wider omnichannel footprint than competitors concentrated largely in the top 100 cities.

     "We are growing pretty rapidly in the smaller cities as well. There is no competition... Their consumer demand is there, and for us, the incremental costs are much lower," he said.

     Taluja said Reliance Retail was witnessing rapid growth in smaller cities, where demand for online grocery services remains largely untapped and incremental infrastructure costs are lower because the company can utilise its existing retail network.

     The company has also reported improvements in key operating metrics, he said.

     "Our average order values have gone up meaningfully. Our fully fulfilled orders have; the percentage has gone up. The average delivery time has gone down substantially over the last four quarters. So it's all moving in the right direction and with the investment being a credit to the bottom line as well," he said.

     Reliance Retail, which had outlined a three- year roadmap, has made substantial progress.

     "If you look at growing our JioMart and Omnichannel, we operate the largest Omnichannel network in the country, and that is reflecting in the numbers. We had 42 per cent growth in the online grocery business. B2C grocery market, the share contribution of online has grown to 70 basis points," he said.

     Taluja said quick-commerce remains a highly competitive segment, with six players operating in the market, leading to pricing pressure and investments in customer acquisition.

     "Our share has grown up by 100 basis points and we operate the largest network of stores. See, if you look at our competition, the next guy is somewhere around 2,500 dark stores," he said.

     Reliance Retail is making selective margin investments, particularly in metropolitan areas, to remain competitive and retain customers.

     "The good part is, compared to other players who are actually making a loss, we have a profitable core, and we are using that to fund the growth engines, which is the online growth engine, and we're still making money," Taluja said.

     The company is also focusing on improving the utilisation of its existing assets and leveraging its scale to enhance margins, rather than relying on discounting-led expansion. Reliance Retail plans to prioritise scale-building for its platform JioMart in FY27 before focusing on profitability and value creation in FY28 and FY29.

     The strategy involves expanding JioMart’s reach across platforms and strengthening its omnichannel presence, while improving product availability, delivery speed and reliability.

     In FY28 and FY29, the focus will shift towards monetising the expanded business by increasing repeat purchases, average basket sizes and customer lifetime value.

(This story has not been edited by THE WEEK and is auto-generated from PTI)