Reliance Retail bets on JioMart scale to drive margins, growth
Bengaluru: Reliance Retail is relying on its flash merchandising arm JioMart as the linchpin to drive sales in categories such as grocery and electronics over the next four quarters and plans to expand its dark store network “aggressively” by carefully monitoring unit economics, its chief financial officer said on Friday.
JioMart is expected to see the benefit of scale in the form of higher margins and cash generation over the next two years as it looks to attract “high-quality customers” who will increase their purchasing frequency, Dinesh Taluja, chief financial officer (CFO) of Reliance Retail, said in Reliance Industries Ltd’s (RIL) investor presentation for the April-June (Q1) quarter of this financial year.
“Basket values are growing over a period of time, which will help improve overall business and margins. In addition to this, we will look at product mix, increasing share of our own brands, increasing monetization and market revenue,” Taluja added.
JioMart’s average daily orders increased by 116% year-on-year in the June quarter, while its active seller base also increased by 26% compared to the same period last year. RIL’s investor presentation showed that the digital share of grocery B2C (business-to-consumer) revenue grew by 13.4% in nominal terms on a year-on-year basis.
JioMart’s service coverage now covers over 5,500 pin codes with over 2,500 digital, fashion and lifestyle stores connected to its two-hour delivery network.
However, increased investments in scaling digital business resulted in Reliance Retail’s EBITDA (earnings before interest, taxes, depreciation and amortization) margin falling to 7.9% in the June quarter from 8.7% in the previous year.
Reliance Retail said it will adopt a cautious expansion strategy. “We will look at various metrics such as order density, repeat rates, fulfillment costs and contribution margins at each dark store. We have set targets for each of these and will evaluate them on the go. We will cut wherever it doesn’t make sense, so growth will be disciplined,” Taluja said.
As density increases and the business gains productivity, inventory turns will also improve and monetization will come into play. This should also ensure healthy returns of capital from these investments, Taluja said.
Talking about Reliance Retail’s digital commerce strategy, Taluja said, “Online growth will be the focus this year but it will be quite measured. The growth will be financed from existing profits and the absolute numbers will increase.”
The company added that in FY27, Reliance Retail will also focus on improving the availability, speed and reliability of JioMart. Investments will be concentrated in micro markets with “a clear path to a positive economy,” according to the presentation.
Mint reported in April how JioMart was using its vast network of physical stores to enable two-hour deliveries, while also moving away from the industry’s obsession with delivery in minutes by broadening its focus to higher-value categories such as electronics and fashion.
JioMart’s comment comes at a time when competition in flash commerce is intensifying, with companies racing to expand in the fast-growing segment.
While Flipkart has grown its Minutes service, Amazon has expanded Amazon Now to more cities in a bid to challenge existing players. Meanwhile, Zepto is preparing for an initial public offering (IPO), joining a growing list of new-age companies tapping the public markets.
Blinkit will lead the flash commerce market with a 47% share in 2025, followed by Zepto with 24% and Swiggy Instamart with 22%, according to market research firm Datum Intelligence’s forecasts. Other players such as Flipkart Minutes, Amazon Now, JioMart and BigBasket together accounted for the remaining 7%, highlighting the significant distance new entrants still have to cover to gain scale.
