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DMart Vs Reliance Retail- The Fight For India’s $635 Billion Retail Ring

Pritish raj by Pritish raj
October 2, 2020
in Insight
Reading Time: 3 mins read
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India’s wealthiest man, Mukesh Ambani, struck down one major competitor in the industry with Reliance Retail acquiring Future Retail and is now left with only one more, India ‘s second wealthiest man, Radhakishan Damani.

The $635 billion Indian retail industry will now see rivalry rise between Ambani with Reliance Retail and Damani with DMart. Though Ambani has size, scale and technology on his side, he has a weaker footing in the grocery market, which is practically emerging for all retail chains as the ‘bread and butter’ sector.

Even though Damani might have seen a fast rise to take the second richest spot in India, Ambani’s wealth is five times more than his.

The rise of DMart was attributed to its ability to outbid Kirana stores with heavy discounts, fuelled by intelligent sourcing, wooing Indians from the middle class into organised retail. But now, with Ambani’s deep pockets and the recent acquisition of Big Bazaar, DMart is going to face bigger problems.

In many more locations, Ambani sells many more items, though Damani has made a name for itself in daily essentials in some parts of the world.

Although Ambani sailed through the lockdown process, the single-channel approach of Damani may also be the reason why the profits of the company suffered a substantial hit during the first three months of the current financial year.

Dmart continues to rely heavily on food for its sales, but its strengths have been tested by the lockdown, becoming an entrenched player with a concentrated approach. The growth plan of DMart is based on an expansion model based on a cluster.

The lockdown has already tested Damani’s model’s immunity. A study by HDFC Securities said: “Higher exposure to some of the most affected Indian districts and store closures in Apr (50 percent of the network closed in Apr) manifested in a serious footfall loss, ergo sales loss for D-MART.”

Reliance Retail has also formed its online venture with JioMart, along with its thousands of stores in tier I, tier II and tier III cities. JioMart jumped into action during the lockdown and extended its offerings to over 200 cities after launching a pilot run in Navi Mumbai in December 2019.

And, with Future Retail’s strong presence in food and apparel, Reliance Retail, whose revenue is currently dominated by consumer electronics, will see a boost.

The diversity in the offerings of Reliance Retail would also expose it to the cyclical nature of demand as a whole business. For example , it may take time to recover from the COVID-19 crisis for some of the luxury goods such as Hamley ‘s Toys or its association with global fashion brands such as Burberry, Armani, Steve Madden, Superdry.

So, according to a Goldman Sachs survey, Ambani’s e-commerce bet JioMart is poised to sell half of all online groceries in India, which is projected to see 5 million orders every day by 2024, Ambani has put his cards on the moneybag of the future.

And now, the $635 billion industry will see a battle for supremacy now, and will test whether the concentration and durability of Damani will be able to withstand Ambani’s money power.

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Pritish raj

Pritish raj

Pritish Raj is a content writer at Next Big Brand. Hailing from the diversified state of Bihar, he is an engineer by education who chooses the way of poetry, photography, and writing to kick off his career. Highly enthusiastic about brands and startups, he aims to be a travel content creator.

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