DMart: driving growth in a changed

business environment
Swapna Pradhan and Smeeta Bhatkal

Introduction Swapna Pradhan is based

at the Department of
5 September 2020: The management team of Pegasus Consulting (PS) – a boutique Marketing, Retail, Prin LN
strategy consulting firm headquartered in Mumbai, India had convened a meeting to Welingkar Institute of
evaluate business options for future growth. Post the COVID-19 pandemic outbreak in the Management Development
country in March 2020; many industry sectors had been experiencing a general slowdown and Research, Mumbai,
in business. The PS team was looking to identify sectors that were hit the most and where India. Smeeta Bhatkal is
their expertise could help revive the business. Many retail stores had shut down, during the based at the Department of
Banking, Finance, Prin LN
months of April and May and it was evident that the retail industry was one of the worst
Welingkar Institute of
impacted sectors due to the spread of the pandemic (Coronavirus impact on India’s retail Management Development
sector, 2020). A recent Edelweiss report suggested a 39% dip in revenues (Shashidhar, and Research, Mumbai,
2020) of DMart stores that were owned and operated by Avenue Supermarts Limited (ASL). India.
The PS team had been following the impressive growth story of DMart since 2017 when ASL
had made a historic market debut with an initial public offering (IPO).
In 2017, DMart had raised equity worth INR 18,700m [1] and gained 114% over the issue
price of INR 299 to close at INR 640.75 on 21 March 2017 (Mudgill, 2018) – it was one of the
best listing-day performances on the Bombay Stock Exchange until date. The stellar debut
had seen the supermarket chain’s market value soar to INR 399,880m, more than the
combined market capitalisation of the next three big listed retailers – Future Retail Ltd.
(FRL), Aditya Birla Fashion and Retail and Trent Ltd. (Burugula, 2017). In the year 2018, the
Indian business newspapers had reported DMart – the Indian supermarket chain’s market
capitalisation as close to INR 1tn (Mudgill, 2017). In 2019, the company had continued to
grow and in the past quarter of 2019 had added 18 new stores taking the total store count to
214 (Pengonda, 2020).
In May 2020, ASL shares traded at 116 times financial year 2020 earnings. In fact, the stock
was about 6% away from its 52-week trading high seen in that month on the National Stock
Exchange (NSE), indicating high investor optimism (Pengonda, 2020). ASL had emerged
as one of the most valued listed retailers in the Indian retail space in the fiscal year
2019–2020. However, much had changed, as the imposition of the countrywide lockdown in
March 2020; based on Government of India and local government directives nearly 50% of
the stores had to be temporarily shut. The stores which were open faced restrictions in
terms of store timing, movement and could sell only essential food and grocery and fast Disclaimer. This case is written
moving consumer goods (FMCG) items (PTI, 2020a). solely for educational purposes
and is not intended to represent
The PS team wanted to make a business consulting pitch to DMart to help them revive their successful or unsuccessful
managerial decision-making.
growth trajectory. What could be the best advice that the PS team could share with DMart in The authors may have
disguised names; financial and
this pitch? For the PS team to get this right, it was important for them to once again revisit other recognisable information
the growth story of DMart. to protect confidentiality.

DOI 10.1108/EEMCS-10-2020-0371 VOL. 11 NO. 3 2021, pp. 1-31, © Emerald Publishing Limited, ISSN 2045-0621 j EMERALD EMERGING MARKETS CASE STUDIES j PAGE 1
 Background
Radhakishan Damani, an astute investor in the Indian equity market, was the founder of
ASL. It was set up in the year 2000 and is headquartered in Mumbai, India [2]. The first
DMart store had opened in the year 2002 in Mumbai and had been set up as a one stop
supermarket chain that addressed the needs of an Indian family [3]. DMart stocked items in
the food, non-food, general merchandise and apparel categories [4] (Refer Exhibit 1). The
core objective was to offer customers good products at optimal prices. The target
consumer segments were the lower-middle, middle and aspiring upper – middle income
customers for whom product pricing was the key influencing factor driving the final
purchase. In a span of more than a decade, when many retail chains in the Indian market
had faced challenges, DMart had emerged as a profitable (Shah and Modi, 2017) national
supermarket chain with a focus on value-retailing (Avenue Supermarts Limited Annual
Report, 2019, 2020) (Key financials of ASL and major competitors are presented in
Exhibit 2).

Building DMart
Product mix and pricing
DMart had carved a niche for itself in the supermarket segment in India by adopting the
everyday low price strategy (Aggarwal and Jogani, 2017). It had steered clear of a policy of
frequently discounting products for a promotion and had instead adopted a strategy of
“everyday discounts, everyday savings” (Aggarwal and Jogani, 2017). This, in turn, meant
that many products were priced lower than those offered by the competition (Refer
Exhibit 3). The focus on offering a good price differential to the customer was important and
DMart offered a 5%–6% discount on food and other FMCG products as opposed to the
1%–2% discount that was offered by other organised retailers (Shashidhar, 2017). The
company ensured that whilst the stores were well stocked, the brand choice was limited to
three to four national brands. This was done with the intention of enabling the stores to meet
the basic needs of consumers (Shah and Modi, 2017). The key idea was to stock the most
popular stock keeping units (SKUs) from the perspective of the target consumer’s monthly
purchase basket thereby enhancing purchase velocity (Shah and Modi, 2017). Maximum
utilisation of shelf space was encouraged within the stores.
A key reason that DMart had been able to pass on the price benefit to consumers was the
fact that they paid suppliers on the day of delivery. In a sector where most retailers opted
for a 30-day payment window, an instant payment mechanism helped DMart keep creditors
low and facilitated better cash discounts from suppliers and also better servicing by them.
The management at DMart believed that efficient inventory management was critical for
profitability and focussed on building operational efficiencies. To enable the same they had
implemented the SAP Enterprise Resource Planning (ERP) platform in the year 2006. This
enabled real time tracking of the movement of goods across stores (Shah and Modi, 2017).
The presence of distribution and packaging centres in the states of Maharashtra, Telangana
and Karnataka (Aggarwal and Jogani, 2017), where DMart had a strong presence helped in
timely replenishments to its stores.

The store networks

Whilst building its retail store network, ASL consciously adopted a strategy of owning the
property and constructing its stores. They either bought the land and built the stores or
sought out a long-term lease for the property, typically 30–60 years and then built the store.
This enabled them to customise the stores as per the catchment area and also cut down on
high rental costs (Aggarwal and Jogani, 2017).

PAGE 2 j EMERALD EMERGING MARKETS CASE STUDIES j VOL. 11 NO. 3 2021

The strategy adopted was that of opening DMart stores in densely populated residential
areas with good accessibility and a promising scope for future development. At the same
time, malls and expensive high streets were avoided essentially due to high rental costs
(Shah and Modi, 2017). They adopted a cluster based approach (Chhoda and Sidhwa,
2018) wherein they focussed on opening stores in the same geographical region which, in
turn, enabled operational synergies (Refer Exhibit 4).
Neville Noronha, MD, ASL in an interview stated as follows:
We focus on existing markets which are known well. When a store is generating high ROI and is
flooded with customers, that’s the time to add a new one (Gupta, 2017).

ASL typically studied the opportunity for retail growth at a state level before deciding on
entering a state. Once the same had been done, it then focussed on opening an optimum
number of stores within that state. Any Tiers II or III town [5] was a potential market for
opening a DMart store (Shah and Modi, 2017). They adopted a cluster expansion approach
and categorically chose smaller, Tier-II cities in India such as Belagavi, Ujjain, Kakinada
and Valsad, where the competition from organised retail was either low or non-existent
(Shah and Modi, 2017).
The key factors that influenced the choice of store location were the population density,
customer, vehicular traffic in the area and the accessibility of the location. Other factors
such as the growth potential of the local population and their estimated spending power
also influenced the choice of store location. These factors enabled ASL to calculate the
potential profitability and the estimated payback period for the store (“DMart, Avenue
Supermarts Limited”, Draft Red Herring Prospectus, 2016). The company adopted a
strategy wherein, once a store reached maturity, i.e, full capacity utilisation; it launched a
new DMart store within a vicinity of 3–5 km. This was also what was popularly known as the
cluster-based expansion strategy.
ASL had in-house business development and project teams whose key focus was the
acquisition of new properties along with the locational teams. Timely construction and the
start of store operations were key to the success of the store. The size of the stores had
been optimised between 10,000 and 50,000 square feet with the average being 30,000
square feet and the design and layout were consistent and predictable to make shopping
easier (Aggarwal and Jogani, 2017).

Sourcing
ASL purchased directly from manufacturers and primary vendors which helped save on
dealer/distributor margins. Further, timely payments to suppliers without resorting to long
credit periods enabled them to avail cash discounts. Apart from offering brands preferred
by local consumers, DMart also offered private label products in the foods and staples
category; essentially in dry groceries such as sugar, salt, food-grain, lentils, pulses, dry
fruits, spices and edible oil – all sold under the brand “DMart Premia” (Soman and Gupta,
2017). The company procured this merchandise in bulk and packaged and branded the
goods post their own quality checks and inspection. Groceries and staples were also sold
by weight; however, this largely depended on the availability of space and consumer
preferences in the area (“DMart, Avenue Supermarts Limited”, Draft Red Herring
Prospectus, 2016).
In the non-foods FMCG category, it was largely the manufacturers who decided on
promotions, choice of variants and withdrawal of a product. The management at DMart
realised that it needed to track sales and inventory on a real time basis to minimise inventory
turnover time. Several factors like display levels at each store, lead time required for
replenishment and average sales played a role in determining when inventory would be
ordered. Often internally ascertained and pre-determined stock levels were followed for

VOL. 11 NO. 3 2021 j EMERALD EMERGING MARKETS CASE STUDIES j PAGE 3

 inventory replenishments and re-ordering, wherever necessary (“DMart, Avenue
Supermarts Limited”, Draft Red Herring Prospectus, 2016).
The ERP software integrated and collated data on various aspects such as sales and
purchases, from all the DMart stores, distribution centres and packaging centres of DMart
(Avenue Supermarts Limited Annual Report, 2016,2017) and helped bring in efficiency into
the system. As of 31 March 2020, ASL had 36 distribution centres and 7 packing centres
(Avenue Supermarts Limited Annual Report, 2019,2020).

Employees
ASL followed a variable employee model, which meant that they used a large number of
contract employees from time to time depending on business requirements. The
management believed that the mix of contract and full-time employees gave them flexibility
in running their business efficiently and helped maintain employee costs below 2% of sales
(Shah and Modi, 2017).
The store managers were rated on the basis of the number of idle cash counters, empty
shelves (especially when stocks existed in warehouses) and the level of pilferage. Further,
ASL allotted Employee Stock Options (ESOPs) [6] to deserving employees; this created a
sense of ownership amongst employees and the management believed that this had a
positive effect on the operations at the store level.
ASL believed that the training of employees played a key role in improving operations and
efficiency and customer service standards. Regular in-house training programmes
focussed on areas such as responsibilities to customers on product quality and customer
service, competitive pricing policies and the operational procedures of stores and regular
updates on developments in management and market trends (“DMart, Avenue Supermarts
Limited”, Draft Red Herring Prospectus, 2016). Retaining people once they were hired
formed an integral part of the company policy.

The Indian food and grocery market

The Indian retail market was one of the most dynamic retail markets in the world. Steady
economic growth, the increase in urbanisation and attractive youth demographics had
fuelled retail growth over the past decade (Refer Exhibit 5). The organised food and grocery
market stood at INR 350bn [7] in FY 2013 and had grown to INR 1,850bn in FY 2019. It was
expected to touch INR 5,200bn by FY 2024 (Shah et al., 2019). Published reports
suggested that 16 states in India contributed to approximately 85% of the retail spend and
these states had a significant role to play in the retail consumption story (Avenue
Supermarts Limited Annual Report, 2016,2017). The penetration of organised food and
grocery stood at a mere 1.9% in FY 2013 and had grown to 4.3% in FY 2019. The same was
estimated to grow to 9.2% by FY 2024 (Shah et al., 2019).
The organised Indian food and grocery market operated with multiple players and formats.
The business was perceived as a high volume, low margin business and was also
extremely competitive in nature as it was characterised by wet markets, cart vendors and
mom and pop stores. Over the years, large Indian corporates had entered the fray with
various formats (Refer Exhibit 6) and this had changed the dynamics of the Indian retail
market.
Reliance Retail Ltd. (RRL) (part of the large Indian conglomerate Reliance Industries Ltd.)
had entered the food and grocery market in the year 2006. It operated the Reliance Fresh
chain of neighbourhood stores and Reliance Smart which is positioned as a destination
supermarket with a strong and simplified value proposition “Big Shopping Equals Smart
Savings”. It also had other retail brands such as Reliance Digital and Reliance Jio stores.
The company had also developed a wide range of offerings as private labels which added

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to the consumer choice available in the stores. Its partnership with farmers and small
vendors had helped reduce wastages by shortening the time taken to move the product to
retail stores. Whilst food and grocery comprised 58%, non-food comprised 39% and other
product categories comprised 3% of the category mix at Reliance Fresh (Vincent, 2018).
The size of the Reliance Fresh store was between 3,000 and 4,000 square feet and the
average sales per square foot ranged between INR 17,500 and INR 18,500 (Vincent, 2018).
Whilst Reliance had forayed into omni – channel retailing under the name of www.
reliancesmart.in, it had also partnered with e-tailer Grofers, for food and groceries.
FRL had forayed into food and grocery retailing with the Big Bazaar stores in the year 2001.
The Food Bazaar chain of supermarkets as a standalone was flagged off in the year 2002.
Whilst food and grocery comprised 61%, non-food comprised 32% and other product
categories comprised 7% of the category mix at food bazaar (Vincent, 2018). The size of
the stores varied between 16,000 and 17,000 square feet and the average sales per square
foot ranged between INR 15,000 and INR 15,500 (Vincent, 2018). One of the key strengths
of the company was the in-store private labels which contributed to approximately
15%–17% of the margins in the food and grocery segment (Roy et al., 2017).
The other player in the supermarket space was the Star Market chain of supermarkets
which was a part of the Tata group. Typically the Star Market stores were of mid-size format
with an average size of 7,500 square feet (PTI, 2017), food and grocery comprised 64%,
non-food comprised 32% and other product categories comprised 4% of the category mix
at Star Market (Vincent, 2018). The company believed that a key driver of footfalls was the
fresh food range and the large offering of in-store private labels.
The food and grocery market had also witnessed the growth of the online business. This
was not surprising considering India was the world’s second-largest internet subscriber
market (PTI, 2019). Over the past five years online retailers such as Big Basket and Amazon
had established their presence albeit in a small way relative to the size of the market.
Bigbasket.com offered consumers the option of ordering online (through their portal or their
mobile app) and getting the order delivered for a fee if orders were below a certain value.
They also offered an express delivery option for certain SKUs (delivery in less than 90 min)
(Soman and Gupta, 2017). They operated in 21 cities across India. The average ticket size
was INR 1,500 and the company processed almost 40,000 orders per day (Soman and
Gupta, 2017).
Amazon offered two grocery services in India, Amazon Pantry and Amazon Now. Amazon
Pantry was an online supermarket from which consumers could fill their virtual box and
secure next-day delivery. This service was offered in 34 cities in India and a delivery charge
was levied for orders below INR 599. Delivery charges were waived for Amazon Prime
members who paid the fee for value added services (Soman and Gupta, 2017). Amazon
Now was launched in 2016 and was available in four cities, where Amazon took on delivery
from offline grocery chains such as BigBazaar (Soman and Gupta, 2017). Other players
such as Grofers, ZopNow.com, GrocerMax.com, NaturesBasket.com, had also expanded
their reach. The convenience of shopping, availability of assortments with free and quick
home delivery had aided the growth of e-commerce companies.
The Indian retail market was also becoming more competitive and in May 2018, Walmart
had acquired Flipkart – a popular Indian e-retailer. The acquisition for $16bn, at a valuation
of over $20bn, made it the world’s largest e-commerce deal. The deal had further
strengthened Walmart’s foray into the Indian market. Whilst Flipkart had until then focussed
on fashion, accessories and appliances, Walmart could strengthen its position in food and
grocery retailing using Flipkart as a medium (ET Online, 2018).
As the nationwide lockdown in India extended beyond April 2020, most of the food and
grocery chains eventually enhanced their own e-commerce operations and started with
home delivery for the customers. Reliance Retail had also introduced JioMart across 200

VOL. 11 NO. 3 2021 j EMERALD EMERGING MARKETS CASE STUDIES j PAGE 5

 cities in the country in the month of May 2020 (PTI, 2020b). Press reports indicated that it
was receiving more than 50,000 orders per day. JioMart operated as an aggregator
between the customers and nearby retail stores. Its model was similar to that of other
delivery aggregators; it served as a procurement and delivery channel between
manufacturers and merchants. Orders could be placed and confirmed by customers on
Whatsapp (Gupta, 2020). The popular messaging platform had a large number of users
which also helped Reliance in customer acquisition. Reliance had also started onboarding
merchant partners (Gupta, 2020):
“Our focus will be India’s 60 million micro, small and medium businesses, 120 million farmers, 30
million small merchants and millions of small and medium enterprises in the informal sector,”
(Pathak, 2020).

䊏 Reliance Jio, press statement (Pathak, 2020)

In late August 2020, Reliance Retail announced the proposed acquisition of the retail
business of Future Group for an amount of approximately Rs. 24,713 crores (Jaganath,
2020). which further consolidated its position as a dominant player in the Indian retail
market.
The retail industry and the food and grocery sector in particular were deeply impacted by
the changes in consumer purchase behaviour during the pandemic. Reports indicated
that the online grocery market was expected to grow at the rate of 81.7% in 2020 as
compared to 2019 and reach INR 182bn and further expected report growth of Compound
Annual Growth Rate of 60% during 2019–2024 [8]. In 2021 demand was expected to be on
the higher side driven by the impact of COVID and the addition of new buyers [9]. Other
reports shared estimates that the share of online sales as a contribution to overall retail
sales had increased in the first six months of 2020, growing to 4.5% up from 3% in 2019.
However, as recovery takes place the numbers may see a marginal decline. The growth in
online purchases was not an urban phenomenon alone, as India’s Tier-III and beyond cities
witnessed 53% growth, making it the fastest-growing region. It was also observed that the
top 5 cities of Tier III contributed only 22% of the overall Tier III order volume, however, in
the metro’s the top 5 cities constituted 90% of the overall order volume (Tandon, 2020).

DMart and its future business growth

ASL had experimented with the platform DMart Ready in 2017 (Pani, 2020). This format
enabled customers to place an order online or through the app and collect purchases from
the DMart Ready stores pick-up points. DMart had thus added the value propositions of
convenience and accessibility apart from the price value proposition that they offered.
Convenience to the customer was a key factor which had driven the company to enhance
the setting up of the DMart Ready stores. Products like fresh pouch milk and general
merchandise which could be purchased over the counter without a prior order had also
been included in the product mix in the store (Singh, 2019). Following the outbreak of the
pandemic, DMart had started servicing its customers through several new channels such
as Home Delivery (using DMart Ready Online App) and DMart on Wheels for large housing
complexes. Some of the stores also operated on a 24 h basis wherever authorities
permitted it. ASL had scaled up the DMart Ready App to operate across more than 200
stores. In August 2020, ASL operated more than 200 DMart Ready stores in the Mumbai
Metropolitan Area (Avenue Supermarts Limited Investor/Analyst Meet, 2020) its expertise,
however, lay in physical retail.
Whilst the PS team realised that DMart had many plus points, the fact remained that the
domestic food and grocery market had undergone a phenomenal change since March
2020. The team also had at hand reports of consumer studies done by some of the large
consulting firms which highlighted how the pandemic was likely to alter consumer behaviour

PAGE 6 j EMERALD EMERGING MARKETS CASE STUDIES j VOL. 11 NO. 3 2021

in the long run. These reports highlighted consumer demand for local products, digital
commerce and omni channel services such as home delivery, chat features and virtual
consultations (PTI, 2020c). One of the reports particularly highlighted the fact that amongst
the consumers surveyed, 75% of consumers said they were being more cost-conscious
when shopping for products and 71% felt that quality, safety and trust were the most Keywords:
considered brand attributes in purchase decisions (PTI, 2020c). Strategy,
Retailing,
The PS team wondered about the strategy that could be adopted by DMart to maintain Financial analysis/
growth in the present difficult time. What should they advise them for sustained future forecasting,
Consumer behaviour
growth, profitability and returns to shareholders, and thus make it a winning pitch?

Notes
1. US$1 was equivalent to INR 65.31 on 21 March 2017, retrieved from www.rbi.org.in/scripts/
ReferenceRateArchive.aspx, accessed on 25 January 2021.
2. DMart – About us, retrieved from www.dmartindia.com/about-us/mission, as accessed on 21 May
2018.
3. DMart – About us, retrieved from www.dmartindia.com/about-us/mission, as accessed on 21 May
2018.
4. DMart – About us, retrieved from www.dmartindia.com/about-us/mission, as accessed on 21 May
2018.
5. The Classification of Indian cities is typically done on the basis of the population, wherein Tier I
include cities which have a population of more than 1 million people. Tier II and comprises of cities
which have a population between 1 – 4.
million and Tiers III and IV comprise of cities with less than 4 million population.
6. ESOP programme is a method that allows an employee to own stock (shares) in the company. This
is often at no cost to the employees and is a part of the employee’s remuneration.
7. US$1 was equivalent to INR 54.41 in 2012–2013, retrieved from www.rbi.org.in/scripts/
PublicationsView.aspx?id=, US$1 was equivalent to INR 71.73 in September 2019, retrieved from
https://www.rbi.org.in/scripts/WSSView.aspx?Id=24007, accessed on 25 January 2021.
8. (September 2020). India Online Grocery Market Performance in the wake of COVID-19 and Outlook
to 2024. https://elibrary.welingkar.org:2143/php/search/docpdf?pc=IN&doc_id=694009872, as
accessed 20 October 2020.
9. (September 2020). India Online Grocery Market Performance in the wake of COVID-19 and Outlook
to 2024. https://elibrary.welingkar.org:2143/php/search/docpdf?pc=IN&doc_id=694009872, as
accessed 20 October 2020.
10. “Coronavirus impact on India’s retail sector (2020, April 14)”, The Economic Times, retrieved from
https://economictimes.indiatimes.com/markets/stocks/news/coronavirus-impact-on-indias-retail-
sector/articleshow/75136711.cms?utm_source=contentofinterest, as accessed on 8 August
2020.
11. Shashidhar A, 2020, June 10). “DMart to post revenue dip of 39% in retail sector: Edelweiss
Report”, Business Today, retrieved from www.businesstoday.in/current/corporate/dmart-to-post-
lowest-revenue-dip-of-39-in-retail-sector-edelweiss-report/story/409529.html as accessed on 3
August 2020.
12. US$1 was equivalent to INR 71.73 in September 2019, retrieved from www.rbi.org.in/scripts/
WSSView.aspx?Id=24007, accessed on 25 January 2021
13. US$1 was equivalent to INR 54.41 in 2012–2013, retrieved from www.rbi.org.in/scripts/
PublicationsView.aspx?id=, US$1 was equivalent to INR 71.73 in September 201, retrieved from
www.rbi.org.in/scripts/WSSView.aspx?Id=2400, accessed on 25 January 2021.

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VOL. 11 NO. 3 2021 j EMERALD EMERGING MARKETS CASE STUDIES j PAGE 9

 Exhibit 1. DMart: Key product categories

Table E1
Food Non-food General merchandise and apparel

Share of FY 2020 revenue (%) 52.40 20.29 27.31

Share of FY 2019 revenue (%) 51.25 20.46 22.29
Share of FY 2018 revenue (%) 51.55 20.03 28.42
Share of FY 2017 revenue (%) 53.65 19.98 26.37
Product categories Dairy, staples, groceries, snacks, Homecare, personal Bed and bath, plastic goods,
frozen products, processed foods, care, toiletries, other footwear, crockery toys and games,
fruits and vegetables, beverages and over the counter home appliances, garments
confectionery products
Source: Avenue Supermarts Ltd (2020), Avenue Supermarts Ltd. (2018)

PAGE 10 j EMERALD EMERGING MARKETS CASE STUDIES j VOL. 11 NO. 3 2021

 Table E2
Profit and loss statement RRL FRL Trent Hypermarket Pvt. Ltd. (THPL)  ASL
20182019 20172018 20162017 20182019 20172018 20162017 20182019 20172018 20162017 20182019 20172018 20162017

Revenue from operations 1,019,465.2 514,561.7 264,376.8 201,649.0 184,779.7 170,750.9 10,005.4 9,395.5 8,347.8 199,162.5 150,088.9 118,811.2
Other income 1,120.3 455.6 354.5 204.7 116.7 238.0 221.2 250.8 475.0 514.1 726.5 312.9
Total income 1,020,585.5 515,017.3 264,731.3 201,853.7 184,896.4 170,988.9 10,226.6 9,646.3 8,822.8 199,676.6 150,815.4 119,124.1
Cost of goods Sold 864,435.4 444,136.9 214,025.3 147,810.8 137,406.8 128,343.5 7,801.3 7,518.6 6,656.4 169,799.4 126,488.8 100,960.0
Gross profit 156,150.1 70,880.4 50,706.0 54,042.9 47,489.6 42,645.4 2,425.3 2,127.7 2,166.4 29,877.2 24,326.6 18,164.1
Employee costs 8,969.9 7,199.3 6,421.4 10,744.1 9,299.5 8,034.4 887.1 783.5 662.8 3,350.3 2,765.6 1,894.7
Finance costs 6,117.0 1,009.6 772.7 2,239.8 1,753.8 2,042.3 4.0 19.0 79.9 471.5 594.2 1,218.0
Depreciation and amortisation 6,016.9 4,342.2 3,685.7 1,005.9 534.3 325.8 328.3 318.8 278.3 1,988.0 1,546.5 1,260.2
Other expenses 86,858.5 39,582.5 32,298.0 32,725.0 29,750.2 28,560.1 2,119.3 2,128.0 1,781.7 9,591.0 7,461.4 6,320.0
Exceptional item (income)/expense 6,038.7 457.6
Profit before Tax 48,187.8 18,746.8 7,528.2 7,328.1 113.1 3,682.8 913.4 664.0 636.3 14,476.4 11,958.9 7,471.2
Tax 16,805.2 6,315.4 3,102.2 0.0 0.0 0.0 1.2 0.8 0.4 5,112.9 4,112.3 2,644.8
Profit after tax 31,382.6 12,431.4 4,426.0 7,328.1 113.1 3,682.8 914.6 663.2 635.9 9,363.5 7,846.6 4,826.4
Balance sheet
Assets
Non-current assets
Fixed assets 114,806.1 73,053.1 29,807.6 16,310.0 10,521.4 5,656.3 4,804.4 3,534.7 3,116.5 46,107.8 34,032.3 27,018.0
Other non-current assets 18,406.7 18,266.5 15,378.2 7,745.9 4,064.7 3,505.2 418.3 220.7 2,904.3 3,577.4 2,628.4 1,322.4
Current assets
Inventories 112,918.3 104,652.8 50,966.8 50,655.9 44,174.1 37,351.6 733.3 725.7 797.2 15,762.2 11,470.4 9,331.6
Trade receivables 43,301.7 22,157.2 7,300.9 3,164.6 2,701.0 2,280.6 221.4 260.4 158.4 755.2 333.6 210.0
Cash, bank and cash equivalents 3,296.9 1,561.2 2,523.1 2,528.1 1,832.3 1,560.4 144.1 117.3 243.1 2,135.5 5,564.6 18,813.1
Other financial assets 33,841.9 2,672.1 5,723.3 16,399.7 13,894.0 14,550.4 1,453.3 2,874.0 1,203.0 591.8 1,300.7 748.1
Other current assets 17,203.9 18,481.2 5,024.3 8,472.6 4,757.3 4,470.8 876.7 187.3 145.7 1,045.8 794.7 578.3
Total assets 343,775.5 240,844.1 116,724.2 105,276.8 81,944.8 69,375.3 8,651.5 7,920.1 8,568.2 69,975.7 56,124.7 58,021.5
Equity and liabilities
Shareholders’ funds 125,874.1 90,664.6 68,195.7 38,519.5 30,962.7 25,536.6 7,138.9 6,352.3 7,013.5 55,944.8 46,427.1 38,370.6
Long-term borrowings 2.2 3,753.1 2,233.3 8.1 0.0 0.0 0.0 1,256.7 2,460.0 9,809.2
Exhibit 2. Key financials of major companies in the sector INR million

Other non-current liabilities 495.3 214.6 198.5 1,947.5 1,707.6 1,896.4 247.9 235.1 176.7 648.5 470.7 531.3
Current liabilities

VOL. 11 NO. 3 2021

Short-term borrowings 128,005.6 34,478.0 274.8 21,786.7 10,014.1 10,775.9 0.0 0.0 0.0 2,991.5 72.5 1,226.6
Trade payables 41,221.0 82,318.7 39,266.8 29,373.2 34,242.3 27,799.9 1,040.2 1,093.2 901.8 4,582.8 3,158.8 2,667.6
Other current liabilities 48,179.5 33,168.2 8,786.2 9,896.8 2,784.8 3,358.4 224.5 239.5 476.2 4,551.4 3,535.6 5,416.2
Total equity and liabilities 343,775.5 240,844.1 116,724.2 105,276.8 81,944.8 69,375.3 8,651.5 7,920.1 8,568.2 69,975.7 56,124.7 58,021.5
Notes:  Standalone statements   consolidated statements. Sources: “RRL: Financial Statements 2018–2019”, Retrieved from www.ril.com/DownloadFiles/FinancialStatementOfSubsidiaries18-19/
Reliance%20Retail%20Limited.pdf, “RRL: Financial Statements 2017–2018”, Retrieved from www.ril.com/DownloadFiles/FinancialStatementOfSubsidiaries17-18/Reliance%20Retail%20Limited.
pdf, “RRL: Financial Statements 2016–2017”, Retrieved from http://www.ril.com/DownloadFiles/FinancialStatementOfSubsidiaries16-17/95%20-%20Reliance%20Retail%20Limited.pdf, “Future
Retail in Every Neighbourhood: Annual Report 2018–2019”, Retrieved from https://www.futureretail.in/pdf/Annual_Report_2018_19.pdf, “Future Retail in Every Neighbourhood: Annual Report
2017–2018”, Retrieved from https://www.futureretail.in/pdf/Annual_Report_2017_18.pdf, “Future Retail in Every Neighbourhood: Annual Report 2016–2017”, www.futureretail.in/pdf/
Annual_Report_2016_17.pdf, “Trent Limited: 67th Annual Report 2018–2019”, https://cdn.shopify.com/s/files/1/0266/6276/4597/files/Sixty_Seventh_Annual_Report_2018-19_26e40cd4-e9ff-4ad7-
b71a-e6a07f065244.pdf?4148Retrieved from, https://cdn.shopify.com/s/files/1/0266/6276/4597/files/Sixty_Sixth_Annual_Report_2017-18.pdf?4154, https://cdn.shopify.com/s/files/1/0266/6276/
4597/files/Sixty_Fifth_Annual_Report_2016-17.pdf?4158; https://api.dmartindia.com/corporate/content/file/v1/PqHPqWwY8XeuTxX6FSg8aM5t/Annual%20Report%202018%20-19%20and%
20AGM%20Notice; https://api.dmartindia.com/corporate/content/file/v1/9zpDhOQuMc9qzZs1oOmOawBD/Annual%20Report%202017-18%20&%20AGM%20Notice; Retrieved from https://api.
dmartindia.com/corporate/content/file/v1/D4MZxFU8LO15vt5nrACDc3Aj/Annual%20Report%202016%20-17

j EMERALD EMERGING MARKETS CASE STUDIES j PAGE 11

 -vis competitors’ across product categories
Exhibit 3. Dmart product price vis-a
(prices in INR)

Table E3
Product SKU Amazon pantry Big basket DMart

Rin advanced detergent powder 7 Kg 440 454 420

Surf excel easy wash detergent powder 1.5 Kg 158 166 141
Vim dishwash bar 600 gm 41 45 40
Lizol disinfectant surface cleaner 975 ml 179 165.57 162
Dove cream beauty bathing bar (pack of 3) 100 gm 135 140 145
Fair and lovely advanced multivitamin 110 gm 184 205 175
Clinic plus strong and long health 340 ml 127 153 139
Head and shoulders anti-dandruff –anti-hairfall 650 ml 374 365 390
Dabur red toothpaste (2  200 gm) 400 gm 169 143.65 119
Pillsbury multigrain atta 5 Kg 245 265
India gate basmati rice mogra 5 Kg 265 342 316
Tata salt 1 Kg 18 20 18
Saffola gold oil 1L 132 132 129
Source: Compiled by case authors, the information collated from retrieved from www.bigbasket.com, Retrieved from www.amazon.in/
pantry-online-grocery-shopping-store, retrieved from www.dmartindia.com

Exhibit 4. ASL’S cluster approach

Table E4
Year 2009–2010 2015–2016 2019–2020
States No. of stores States No. of stores States No. of stores

Gujarat 12 Gujarat 26 Gujarat 37

Maharashtra 20 Maharashtra 58 Maharashtra 76
Daman 1
Karnataka 6 Karnataka 20
Andhra Pradesh and 16 Andhra Pradesh and 41
Telangana Telangana
Madhya Pradesh and 4 Madhya Pradesh and 16
Chattisgarh Chattisgarh
Punjab 5
NCR 1
Rajasthan 7
Tamil Nadu 10
Total number of stores 32 110 214
Source: Avenue Supermarts Limited (2020)

PAGE 12 j EMERALD EMERGING MARKETS CASE STUDIES j VOL. 11 NO. 3 2021

Exhibit 5. Indian retail market

Table E5
INR FY 2013 FY 2019 FY 2024 (E)

Organised F and G Retail INR 350bn INR 1,850bn INR 5,200bn

DMart’s revenue (%) of organised F and G retail in India 0.5 2.9 9.2
Organised F and G penetration (%) 1.9 4.3 7.3
DMart share in organised F and G (% ) 8.5 11.5 13.4
Source: Shah (2019)

Exhibit 6. Snapshot of the major players in the food and grocery segment for the
year ending 31 March 2019

Table E6
RRL FRL THPL ASL

Promoter Group Reliance Group Future Group (Kishore Tata Group RK Damani
Biyani)
Store Brand Reliance Fresh, Reliance Big Bazaar, Easyday, Star DMart
Smart, Reliance Digital, Heritage Fresh, FBB, Food
Reliance Jio stores, Hall, 7–11, WH Smith
Reliance Footprint, Reliance
Trends
Product portfolio Food, grocery, fashion, Food, consumer goods, Food and grocery Grocery, home care, etc.
footwear, electronics home care, electronics,
consumer durables
No. of stores 10,415 1,514 44 176
Geographical presence Pan India Pan India Pan India Pan India
Revenues from operations 1,019,465 201,649 10,005 199,163
INR in Million
Profit after tax 31,383 7,328 915 9,364
INR in Million
Market Capitalisation INR in Unlisted 228,105 Unlisted 918,091
Million (on 29 March 2019)
Source: Company Annual Reports and NSE website (2020)

Corresponding author
Swapna Pradhan can be contacted at: swapna.pradhan@welingkar.org

VOL. 11 NO. 3 2021 j EMERALD EMERGING MARKETS CASE STUDIES j PAGE 13