With the growing potential of e-commerce – Reliance Retail recently started its pilot entry into e-commerce with online grocery store (RelianceFreshDirect.com). The company through this website will deliver fresh grocery products (fruits, vegetables, dairy products, groceries, packaged food, confectionery, personal care products) to service few micro markets in Mumbai (ie South Mumbai and some suburban markets).
The online retailing in India stands at $600mn per annum currently and is likely to have the potential to grow to $70bn by 2020. We believe this strategy will help Reliance tap the e-commerce vertical for improving its retail penetration; and think successful roll-out with good customer feedback on pilot rollout of online distribution could help add more products to this distribution channel. This should help leverage its brick-mortar retail outlets and supply-chain better and drive operating leverage benefits going forward.
Reliance wants to strength its presence across Cash & Carry, Digital and Fashion lifestyle verticals – which cumulative contribute ~92% of its total retail revenues.
Reliance Market is a leader in wholesale Cash and Carry segment with 32 operational stores and more than 1.5mn registered members. Its ladder pricing allows small shop owners to save more by buying more of their requirements. Own brand contribution is at 14%.
Reliance Digital vertical successfully launched Digital Express Mini format with over 430 stores across the country and plans to further scale this up – launched an end to end solutions and technical support service called resQ.
Fashion & Lifestyle vertical is focusing to develop design capabilities. Own label brands contributed to 65% of Reliance Trends business – targets to open 80 stores by 2016 including expanding in tier 2 cities.