Reliance Retail plans category expansion on JioMart to fight COVID-19

As the impact of the COVID-19 second wave recedes in the country, Reliance Retail is looking to accelerate its digital commerce by horizontally expanding across major categories on JioMart. The horizontal play envisages growing new commerce merchant partnerships across businesses and geographies. The company is also looking at expanding its own brand portfolio across categories to strengthen JioMart.

In its last earnings call, the company announced that it is in the process of launching new private label brands and wants to scale up the existing ones. The new brands will play a major role in fashion and lifestyle, electronics as well as grocery segments. The recent acquisitions of Urban Ladder and Zivame are also expected to size up the respective categories of the company's retail business.

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Reliance Retail, which is India's largest retailer with 12,711 stores across the country, has already integrated its grocery and Trends stores network with JioMart. Over 400 Trends stores have been integrated as of last quarter, while the grocery store network of over 800 stores was integrated right from the launch of the e-commerce platform last year. JioMart has recently piloted the electronics category in Navi Mumbai with a select portfolio of products like audio accessories and small appliances.

"On JioMart, the assortment is three times more than it was when we launched," said Dinesh Thapar, group CFO of Reliance Retail, in the last analyst call. The emphasis is to offer widest possible selection to customers, he added.

According to Thapar, JioMart has a high retention of customers with 80 per cent repeat orders. Simultaneously, JioMart has also extended its new commerce model with the kiranas. The JioMart Kirana programme, which changes the kirana format to open store rather than closed, has been extended to 10 more cities in the previous quarter, taking the total to 33 cities in March.

The digital commerce also targets another category expansion shortly through the recently acquired online pharmacy Netmeds. It has opened 114 physical pharmacies within Reliance Retail stores in the March quarter and is also growing its product catalogue by onboarding third-party sellers to expand its online reach. Netmeds' hyperlocal delivery is under pilot in Bangalore.

In order to strengthen its digital commerce play across categories, Reliance Retail is also looking at expanding its own brand portfolio within each category and is continuously introducing new private label FMCG brands. In fashion, Trends and AJIO have a rich portfolio of their own brands, while in electronics the company is looking at a collective play of its in-house brand (called Reconnect) and a host of licensed brands.

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"We are expanding our own brand portfolio," Thapar stated in the last analyst call. For this purpose, Reliance Retail has recently relaunched iconic brands like Kelvinator, BPL, and Walt Disney-cobranded products.

In 2019, the retail arm of India's largest conglomerate had signed an exclusive brand licensing, manufacturing, marketing, and distribution deal for Kelvinator with Swedish appliance maker Electrolux, which owns the brand.

The BPL agreement has helped the company establish its presence in electrical categories like fans, residential lights, personal care appliances, etc. With another licensing agreement with Walt Disney Company, Reliance Retail wants to grow its share in the children's segment as well.

It has already launched Disney and Marvel co-branded personal products in electronics that include headphones, bluetooth speakers, electric toasters, and hair dryers. The company is also looking at extending its tie-up with Walt Disney to other categories including toys, packaged foods like biscuits and breakfast cereals, apparel, and back-to-school items like school bags, lunch boxes, and stationery.

While the second wave of COVID-19 is seen as a dampener for the retail sector's recovery, analysts expect Reliance Retail's ramp-up in omnichannel/new commerce to consolidate its business.

"We expect signi?cant market share wins for RIL, driven by investment-led scale-up in digital assets complemented by their lower cost structure driven by large of?ine presence and rising private label contribution," Goldman Sachs said in its report.

It forecasts a 50 per cent market share for RIL in the online grocery market by FY25, with a 30 per cent market share in overall e-commerce. It translates into $35 billion gross merchandise value (GMV) and $15 billion in revenues by FY25.

Another report by JP Morgan Research has stated that JioMart's activity is scaling up. The note added that it found brisk online activity across stores and formats it visited in Mumbai in the last week of March.