D-mart is a chain of hypermarket and supermarkets in India which was first started in 2002 in Mumbai by Mr. Radhakishan Damani
From the launch of its first store in Powai in 2002, D-Mart today has a well-established presence in 176 locations across Maharashtra, Gujarat, Andhra Pradesh, Madhya Pradesh, Karnataka, Telangana, Chhattisgarh, NCR, Tamil Nadu, Punjab and Rajasthan. At the time of its IPO last year, the company was valued at Rs 40,000 crore and the projected growth rate was 40 per cent.
The supermarket chain of D-Mart stores is owned and operated by Avenue Supermarts Ltd. (ASL). The brands D Mart, D Mart Minimax, D Mart Premia, D Homes, Dutch Harbour, etc are brands owned by ASL
D-Mart is widely known to be a one-stop shopping destination to meet all the household needs of a family. It offers a wide variety of products including – home utility products, foods, toiletries, beauty products, garments, kitchenware, bed and bath linen, home appliances, Toys & Games, Stationery, Footwear, and a lot more.
Strategies Adopted By D-mart
D-Mart always wanted to create its image amongst the people, of a discount store that offers most of the products from across all major brands. Basically, a store that offers value for money!
D-mart stores are operational in high traffic areas and across three formats including – Hypermarkets, that are spread across 30,000-35,000 sqft, Express format, that is spread over 7,000-10,000 sqft and lastly, the Super Centers, that are set up at over 1 lakh sqft.
Dmart’s targets middle income group, and uses Discount offers as a promotional tool to attract the customers and boosting sales.
Overall – Dmart’s success is focused on three things: Customers, Vendors and Employees!
Customers. Since Dmart is targeting middle income households, all their stores are in, or close to, residential areas and not in malls. Their idea is not to meet every consumer need like other competitors, but instead, Dmart aspires to meet most regular consumer needs, while providing value for their money.
One of the striking features of functioning of D-Mart is 90% of these stores are owned directly by Dmart, they don’t pay monthly rentals. Additionally, this helps them book assets on their books. All the cash that is saved is eventually offered back to the customers in the form of discounts!
Vendors! Vendor relationships are the second pillar of their model. Since Damani comes from a trader background, his vendor relationships have been his biggest strength. The FMCG industry has a payment terms of 12-21 days, but Dmart pays its vendors on 11th day itself. This helps him stay in the priority list of the vendors. Since Dmart buys in bulk and pays its vendors on time, they also get to earn higher margins.
Their strategy is to “Buy it low, stack it high and sell it cheap”!
How Did Dmart Turn Profitable So Fast?
In a market where more recognized and larger counterparts such as Spencer’s, More Store, Star Bazaar and Hypercity, are waiting to achieve profits, Dmart has successfully managed to crack the code in just about a decade.
Out of the all the stores it runs, Dmart owns majority of the properties, which helps them to save a huge chunk of money on rent. They avoid opening stores inside malls unlike other hypermarkets to avoid highly inflated rents. Since rent is added to the operations costs of a retailer, that burden goes away, and helps D-mart to boost its profits further. This amounts for almost 6-10 % of its sales.
What helps them even more is that, since most D-Mart stores are in the suburbs in the metros and in tier II & tier III cities, the operational costs remain low.
Other than that, Dmart also saves a good amount of 2-3% from the suppliers by paying them upfront in about 48 hours of delivery, when all other organised retailers, buy goods on credit of 30-60 days.
Unlike bigger retailers, costs are further kept low by keeping a basic and economical layout without any high investments
Inspite of its gigantic size, Dmart has managed to keep its financials at check and grounded too. They have kept their debts to a bare minimum and have also cut their marketing spends by 30-40 % in the last couple of years to save costs.
Their Growth Been So Far
In 1999, when retailing was far from reality, at least in India, Damani decided to enter the ring. Damani, left the stock market for about six years, and along with Damodar Mall, (CEO of Reliance retail today) took a ‘Apna Bazaar’ franchisee in Navi Mumbai and soon, added one more. Two years later, they setup D-mart and acquired Apna Bazaar.
Within about a year, when everything seemed sorted, they decided to apply the model to multiple locations as well.
In 2007, Dmart began its expansion and went on to open various stores in Ahmedabad, Baroda, Pune, Sangli and Solapur.
By 2012-13 – Dmart had soared its revenues from Rs. 260 crores in 2006-07 to Rs. 3,334 crores, making them India’s third-largest branded retail chain.
The amazing part was that, what Future Group with 1000 stores was clocking (turnover of Rs.14,201 crores), and Reliance Retail was clocking (Rs.10,800 crores) with 1450 stores; Dmart was achieving with just 65 stores, which weren’t PAN India. Their sales per store was somewhere close to Rs. 53 crores, while Reliance was making around Rs. 7.45 crores per store.
In just a span of 13 years, Dmart had also managed to achieve profitability, and was now making around 2.5 %. In the 15 years of its existence, D-Mart has turned a profit each year.