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Reliance Retail’s e-commerce segment growing, offline stores continue to see low footfalls

Reliance Retail’s e-commerce segments such as AJIO, JioMart and Reliance Digital have grown in both customers and value. AJIO, Reliance Retail Ventures Limited’s (RRVL) lifestyle fashion website, recorded four times as many orders compared to pre-COVID-levels. JioMart, the latest entrant into the e-grocery space, is also growing “exponentially”, the company said in its earnings release for the quarter ending September 30.

Overall, business is rebounding in a “sharp V-shape” trajectory, according to Dinesh Thapar, the company’s chief financial officer. The company managed to continue store expansions during the quarter. At the same time, footfalls continued to be lower because of consumers still being wary of visiting stores.

The company posted an EBIDTA of ₹2,006 crore this quarter, an 85% improvement from the previous quarter which was deeply impacted by the pandemic. But this is still considerably low compared to Q2 of 2019-21, when it posted an EBITDA of ₹2,322 crore.

The last few months have been especially important for the company as it has raised as much as ₹37,710 crore in investments (for a cumulative of 8.22% stake) from from Silver Lake, KKR, General Atlantic, Mudabala, TPG Capital, the Abu Dhabi Investment Authority and GIC. During this quarter, Reliance Retail also began the process of acquiring Future Group’s retail and wholesale business, a deal which is currently being challenged by Amazon which has an indirect stake in Future Group. Reliance Retail has also entered the e-pharmacy space by acquiring Netmeds. 

“Retail business activity has normalised with strong growth in key consumption baskets as lockdowns ease across the country. With large capital raise in last six months across Jio and Retail business, we have welcomed several strategic and financial investors into Reliance family” — Mukesh Ambani, CMD, Reliance Industries Limited

  • E-commerce business growing: The company said almost its e-commerce was registering good growth. JioMart’s business, which is scaling “exponentially”, is still being led by staples and processed food, as the trend has been since the outbreak of the pandemic. While “footfalls” were lower, this is being offset by higher bill values. AJIO is seeing four times the number of orders as it did during pre-COVID times. The company has also started leveraging AJIO’s growth to sell jewellery from its brands. JioMart Kirana partnerships extended to 20 cities, as compared to just six the previous quarter.
  • New store openings: Reliance Retails opened 232 new stores this quarter, taking the total stores to 11,931.
  • Store functioning improves: Around 85% of Reliance Retail stores were either fully or partially operational this quarter. This is an improvement of the 50% figure seen during the previous quarter. The company, however, admitted things were not yet ideal since lockdown restrictions still allowed only half of the operational stores to be fully open.
  • Footfalls in September 85% of pre-Covid levels: Footfall in stores was 75% this quarter, up from 43% the previous one. September footfall was around 85% of pre-Covid levels.
  • Double digit growth in consumer electronics sales: The company’s sales in consumer electronics recorded twice the revenue as compared to the previous quarter. E-commerce integration of the business helped home delivery of orders. The company claimed 86% of ordered from stores were delivered to homes within six hours.
  • Buying is sharply focused: CFO Dinesh Thapar said that customers were still not prone to impulse buying and window shopping in fashion and lifestyle segments. “We’ve seen that buying is far more sharply focused. Customers, when come to the store know what they are there for,” he said.

Reliance Retails earnings (Q2 2020-21)

  • Revenues: ₹41,100 crore (up 30% from Q1 2020-21)
  • Net profit: ₹973 crore (up 125.8% from Q1 2020-21
  • EBITDA: ₹2,006 crore (up 85.9% from Q1 2020-21)

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