Written By Writankar Mukherjee, ET Bureau
The entry of online smartphone brands Xiaomi and Motorola into offline helped Mukesh Ambani’s consumer electronics and smartphone retailing business, Reliance Digital, enter the $2-billion league.
According to two senior industry executives aware of the details, the business grew by 31% to reach Rs 15,100 crore, or about $2.3 billion, in the year ended March 2018 from Rs 11,480 crore in 2016-17.
This performance excludes sales of Reliance Jio connections and recharges, which are done by Reliance Digital and smaller format Jio Stores that are part of the same business.
While Reliance attributed the growth to “focused assortment and bringing online brands offline like Xiaomi and Moto (Motorola)” in an investor presentation of its Q4 earnings announced last Friday, industry analysts said competitive pricing and offers at par with top online marketplaces, Flipkart and Amazon, have driven sales at Reliance Digital.
The company said its electronics retailing business continues to “outpace market growth across key product categories”.
The business has more than 220 large format Reliance Digital stores and over 1,800 smaller format neighbourhood Jio stores, which also sell smartphones and do catalogue sales of television and appliances.
With this, Reliance Digital is more than four times the size of its nearest rival, Croma chain of the Tata Group.
While Croma’s financial performance for FY18 is yet to be declared, the business had clocked Rs 3,268 crore sales in 2016-17 as per latest regulatory filings to the Registrar of Companies. Reliance Digital had raced past Croma in sales in 2014-15.
The earnings release and presentation did not reveal the annualised revenue break-up of the consumer electronics retailing busines
Emailed queries sent to Reliance Retail on Saturday remained unanswered till Monday press time.
An industry executive said Reliance Digital has been able to grow despite the return of deep online discounts in categories like smartphones and television during the last festive season and the introduction of the single levy goods and services tax (GST), which had impacted the industry.
“Reliance Digital has grown not just in smartphones, but also in TVs and appliances, including its private label Reconnect. The revenue also includes the service business, which is currently small with 70 service centres but is poised to become a major driver going forward,” he said.
Devangshu Dutta, CEO at Third Eyesight, a retail and consumer goods consulting company, said while margins are low in consumer electronics and smartphone segment, Reliance Retail is pushing volume sales, which would then make sense of margins in aggregate.“ For Reliance, the consumer electronics retailing business is quite strategic in pushing sales of digital devices like smartphones, connected TVs and appliances which in turn will drive Jio data consumption,” he said.
Reliance Digital had become the largest contributor to Reliance Retail revenues in 2016-17, accounting for 34% of overall business by overtaking the grocery segment. It is also the country’s largest retailer of smartphones, televisions and white goods.