D MART CASE

STUDY & SWOT

ANALYSIS

OM DR MANE

20131 - 20135

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 CASE STUDY
DMART
D-Mart is a one-stop supermarket chain that aims to offer customers a wide
range of basic home and personal products under one roof. Each D-Mart store
stocks home utility products – including food, toiletries, beauty products,
garments, kitchenware, bed and bath linen, home appliances and more, all
available at competitive prices. The core objective is to offer customers good
products at great value. D-Mart was started by Mr. Radhakishan Damani and
his family to address the growing needs of the Indian family. From the launch
of its first store in Powai in 2002, D-Mart today has a well-established
presence in 112 locations across Maharashtra, Gujarat, Andhra Pradesh,
Madhya Pradesh, Karnataka, Telangana, Chhattisgarh and NCR. With our
mission to be the lowest priced retailer in the regions we operate, our
business continues to grow with new locations planned in more cities. The
supermarket chain of D-Mart stores is owned and operated by Avenue
Supermarts Ltd. (ASL). The company has its headquarters in Mumbai. D-Mart
is India’s most profitable and fastest growing large modern retailer. Avenue
Supermarts Ltd, which owns and operates hypermarkets and supermarkets
retail chain D-Mart, returned a profit of 211 crore in 2014–15, higher than
Reliance Retail’s 159 crore and Future Retail’s 153 crore. Its revenue in the
same period was 6,450 crores, 37.23% more than the previous year’s.
Reliance Retail’s revenue grew 21% in the same period. The other
Hypermarkets like the Tata Group’s Trent Ltd and Future Retail’s had a decline
in revenue due to tough competition. Following are the factors which
differentiated D-Mart from its counterparts: The company’s focus is on
competing in the basic needs space and on efficiencies similar to what the
largest retailers globally have done. The real challenge for the retailer will
surface now since it is hoping to expand to more cities in Karnataka and

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Andhra Pradesh where it is difficult to find stores which match expectations.
Its first phase (of growth) has been successful. Replicating it in the next
phases will be the challenge. When a firm is a regional player, it will run a
people-driven business. But when it goes national, it has to have foolproof
and strong processes.

STRENGTHS OF DMART
 The chain offers prices that are 6–7% lower than its competition, no
matter where it operates. It sells at a price lower than others by keeping
their cost low and running the business effectively.
 It also differentiates its operational styles from other competitors. Out
of the 65 stores it runs, D-Mart owns 55 properties, saving substantially
on rent, which constituted 6–10% of retailer’s sales. D-Mart also refrains
from opening stores inside malls unlike other hypermarkets. This helps
in boosting operating cost.
 When opening a store, D-Mart selects areas neighbouring residential
societies, setting an easy catchment area.
 Costs are further kept low by a no-frills layout without any flashy
interior.
 D-Mart extracts a few brownie points even from its suppliers. It pays
them within 48 hours of delivery, and they, in turn, allow for an
additional 2–3 per cent gross margin to the chain, enabling it to keep
the prices low at most of its locations.
 D-Mart has not taken on a lot of debt, unlike its bigger peers and has cut
advertising budgets by 30–40 per cent in the last couple of years to save
costs. Its debt to equity ratio is 0.65.

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WEAKNESS OF DMART
 Focus on certain areas: Unlike their competitors, who are everywhere, D
Mart has concentrated its efforts in the Western States, with a negligible
presence in the South. As a result, they have been unable to gain market
share.
 Slow growth: D Mart was founded nearly 16 years ago, well before
India's retail boom erupted. However, due to its long-term
concentration, it has not been able to capture the market as effectively
as many of the subsequent arrivals.
 Cheap pricing: Sustainable because the company has a zero credit
policy, which means vendors and suppliers give them a significantly
better deal, which is how the company can afford the low costs that
competitors couldn't envision.
 No-frills approach to business, focusing on cutting costs wherever
possible. Their amenities are minimal and lack the luxuries seen in most
high-end stores. Customers who come here are mostly interested in the
low pricing of the things on sale. As a result, the long-term viability of
this differentiator is in doubt.

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OPPORTUNITIES IN THE SWOT ANALYSIS OF DMART
 Technology has a lot to offer retailers in terms of in-store experiences,
and merchants can leverage IoT, artificial intelligence, and other
technologies to provide customers with value-added services for which
they may charge a premium.
 Personalization of services: Customers are looking for personalised
services for which they are willing to pay a premium. Retailers should
expand on this willingness to pay more and boost the quality of services
they offer.
 New Developing Markets: New developing markets and mall culture can
be the biggest opportunity for the company.
 South of India: D-Mart can also open stores in the south and areas
where no store is there.

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THREATS IN THE SWOT ANALYSIS OF DMART
 People in big cities are notoriously lazy when it comes to getting out of
the house, and they frequently shop online. As a result, companies like
Amazon and Flipkart are now major competitors for most merchants.
 In India, online startups are the newest craze. Many of these are
aggregators that bring the manufacturer and the consumer together at a
low cost.
 These firms are developing concerns, particularly in the aggregation
business, where many new brands are arising as a result of lower entry
barriers.
 Competition from around the world.

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