Mission

To be the lowest priced retailer in the area of operation/city.

Vision
It is our continuous endeavour to investigate identify and make available new product
categories for customer’s everyday use & at the best value than anybody else.

Why this organization

In covid time, retail industry struggle to make profit but DMART shows healthy profit. This
scenario is not only during covid time but from the last decade. DMART is making
continuous profit much higher than the retail industry. We choose this organization for
analysing the strategy DMART is following to keep up with high profit percentage
irrespective of low profit margin in the retail industry.

Company History

2001 The company was incorporated as Avenue Supermarts Private Limited.

2003 The company opened its first store in Powai, Mumbai.

2007 The company opened its first store in Gujarat.

2010 The store count of the company crossed 25 stores.

2011 The company opened stores in Andhra Pradesh and Karnataka.

2012 The company was converted from a private company to a public company and the name of the company changed to
Avenue Supermarts Limited. The store count of the company crossed 50 stores.

2014 The store count of the company increased to 75 stores.

2015 The company opened stores in Madhya Pradesh and Chhattisgarh.

2016 The company opened 21 stores, highest in any financial year. The store count of the company increased to 110.

2017 The company opened stores in the National Capital Region, Rajasthan, and Daman.

2020 D-Mart closed its two retail stores in Mumbai and converted them into fulfilment centers to cater to its growing e-
commerce business in the city.

2021 The company posted financial results for Q1 2021 with net sales of Rs. 7,303 crore (US $ 1,002.9 million) and net profit of
Rs. 435 crore (US $ 59.7 million).

Major hurdles faced by the company

Internal :
D-Mart is currently facing the challenge of “excess inventory”. Since March,21 the company
has been getting supplies on regular intervals and in a constant amount of pre-covid
period.

The retail industry follows a 3-week payment period policy for paying the suppliers. But D-
Mart pays its suppliers the due amount within 7 days, this helps them create a good credit
value for the company and large discounts that can be passed on to customers finally. By
not stopping the supply the company is securing its long time build relationship with its
suppliers.

External :

The major competitor of D-mart is Reliance-Future retail chain. Reliance Retail is

the largest organized retail player in the country, occupying a third of the market
after it acquired Future group’s retail assets a month ago. The grocery revenues of
the Reliance-Future combine were 2.5 times that of D-Mart.

Reliance has a wi der spread, thanks to a network of close to 12,000 stores in the country.
The Future deal will give it an additional 1,800 stores.
Business Strategy .

•Deep Discounting
6%-10% Discounts on the product in DMART. So, it makes a preferable place
for middle class. Despite of its locations which is distant from cities.

•Product Assortment
Special discount on a product increases the sale of not only the product but
also increase the sale of other product in the store.

•Inventory moves in a flash

•fresh stocks lead to attract customers
•Few Expire product leads to reduce expense
•Bargaining advantage with sellers.

vDMART Competitive Strategy

QCareful in opening new stores
•Understand customer
•Operational Efficiency
•Solid relationship with suppliers

Retailer No. of stores

DMART 220
Future Group 284
Reliance Retail 11000

qOwnership
DMART does not rent places for business rather it buys the whole building
and saves a ton of money on renting than its competitors.
Rent (as % of
Retail expenses)
Future Group 8.2%
Reliance Retail 5.0%
DMART 0.2%

qNon-Fancy Stores
Most of the stores of DMART are in Suburb and Tier-1 & Tier-2 Cities.
Revenue Profit
Retail (Per Sq. foot) (Per Sq. foot)
Future Group ₹ 12,914 ₹ 252
Reliance
Retail ₹ 13,901 ₹ 232
DMART ₹ 25,844 ₹ 965

PORTER’S FIVE FORCE ANALYSIS IN RETAILING INDUSTRY

FOR DMART

WHY THIS MODEL?

The five forces are used

to measure competition
intensity, attractiveness,
and to evaluate the root
cause of profitability in
an industry or market
 Internal Competition (Rivalry)-HIGH

Number of competitors (HIGH): There are many competitors in this sector as it is a

growing industry.

Size of competitors (HIGH): Below is the latest data from money control regarding
the top competitors in retail sector. The top competitors hold good share of market.
Top Competitors: Trent, Aditya Birla F, V- Mart Retail (Infer Market cap and Profits)

Industry Growth (HIGH):

 The modern Indian retail industry is expected to grow at a 15% CAGR to reach
18% by 2025
 Increasing Investments as foreign retailers are entering the Indian Market
 Inclusion of Retail and Wholesale trades as MSMEs (They will get the benefit of
priority sector lending under RBI guidelines)
Effect on profit potential: Profitability in such industries is low as firms adopt
aggressive targeting and pricing strategies against each other (As Switching costs are
low for customers).

Threat of New Entrants- MEDIUM

Customer Loyalty (MEDIUM): Customer’s loyalty is to a medium level. In this

industry customers choose retailers based on price.
It is medium because other factors that effect loyalty are quality, accessibility ( Nearest
Mart)
Product Differentiation (LOW) : All the Marts sell same products, these are price
sensitive markets.

Capital Requirements (HIGH): You need a lot of money and time. Huge Marketing
costs will be incurred to launch. A lot of initial investment is required for rent, salary
structure, supplies, infrastructure. Etc.
 Government Policies (HIGH): No hard and long policies or rules to put a mart

Bargaining Power of Suppliers-LOW

Size of Suppliers: As compared to the retail chain, and the number of big retail players in
the market, the size of supplier is very small, and number of suppliers is large. This leads
to a LOW bargaining power for the suppliers.

Bargaining Power of Buyers-HIGH

Size of competitors (HIGH): The number of retailers is significantly high, these

marts have cutthroat competition by offering lower discounts to capture more
market share.

Switching Cost (LOW): If a buyer is getting a better deal with some other retailer,
he/she can shift to that provider with actually no switching cost.

Both of these factors lead to a high bargaining power of buyers.

Threat of Substitutes-MEDIUM:

Since D-Mart follows a high discount to customers strategy to attract and retain
customers. This can only be followed by D-Mart through series of strategies and
processes they carry out in their operations. This might not be very easy to imitate by
other firms. So, Threat of Substitute is MEDIUM.
VRIO Framework
VRIO framework is a resource base framework for the internal analysis of the firm. In this framework, we
analyse competitive advantage of the firm in the industry.
Valuable
1. D Mart gives deep discount to its customer. So, it generates great value for the customer, and it is
difficult for the customer to switch to the other competitor.
2. Fresh stocks in the store helps D Mart to become customer friendly store.
Rare
1. Its location is not at prime location. It is mainly focus on small cities, but its competitor strategy is
quite opposite.
2. Its simplicity of the store and don’t spend to much on store enterers.
Imitable.
1. It most of the store by itself
2. It is hard to imitate its inventory management of D Mart
3. Highly loyal customer base. The strategy uses by D Mart is difficult to imitate and currently not
adopted my its rivals. They cannot provide the incentive for a long time. So it is difficulty to imitate
D mart strategy
Organised
1. D Mart organized its resources efficiently, like inventory management, save rental cost, focus on low
end customer in tier-2 & tier-3 cities.
2. Its management level doing well, and they take any decision in very careful way life despite of
growing fast its number of stores is relatively low compared to its rivals

Resources Valuable Rare Imitable Organised Competitive

advantage

HR Yes No No Yes Medium

Customer base Yes No No Yes Medium
Relationship with supplier Yes No No Yes Medium
Management Yes Yes Yes Yes High
Location & properties Yes Yes Yes Yes High
Brand Yes Yes Yes Yes High
Simplicity yes Yes No Yes Medium

So, after analyse the upper table we can say that D Mart has some competitive advantage over other in
some of the field. But we cannot say that it is inevitable for the competitor to compete with it.
SWOT Analysis

Strength

 loyal customers- due to the deep discount and fresh stock in the stores. Customers of D Mart wont
easily to any other retail outlets
 maintain good relationship with supplies
 Discount policy gives edge over its competitor, and it is hard to imitate by its rival because expense
of D Mart is hugely less than its competitor
 Take time in opening new stores because its focus on improving supply chain
Weakness

 Very few stores as compared to its competitor

 Presence limited to western side, it can expand in the south as well
 Sustainability at deep discount is not risk
Opportunity

 It can go online like Jio mart and reach at all type of customers
 Open new stores
 Start franchises stores
Threats

 Online retailers like Amazon, Flipkart, Jio Mart etc. are coming with also deep discount strategies.
So, it will hamper the growth of D Mart
 New start-ups in the online field (particularly in small areas) because low entry of barriers, they are
coming each days.

Current scenario
  D Mart offered cheapest rate of 21 out of 30 product October 2020 but, in Mar-20 it
only offers 12 cheapest products in the 30 products.
 Reliance Retail and Future group are also providing deep discount and giving huge
competition to D Mart. And it is losing it competitive advantage in deep discount
 Online E-Com like Jio Mart, Big basket, Instamart etc. also capturing market in E-com
business.
 56% Revenue of the D Mart comes from Foods and 23% FMCG product. But these
products don’t have much margin. Only 24% of the revenue comes from General
Merchandise and Apparel which have some margin

 What is next?
D Mart Ready
 D Mart started its E-Com as D Mart Ready in the five cities,
Mumbai, Hyderabad, Pune, Ahmedabad, Bangalore to cope up
with e-commerce like amazon, Flipkart, Jio Mart etc.
 But in last two years, but the revenue of D Mart Ready is only
contribute 3% of the revenue of the firms.
 Growth of D Mart ready in e-com is very slow. If it continues to
run this speed, It cannot survive in this highly competitive market.

Open bigger stores
  Due to low property price after the pandemic hits hard for infra-
Sector.
 D Mart wants to increase the revenue from margin products
 Boast the supply chain for D Mart Ready.

Recommendations-
 D Mart Ready should go aggressively in the E-com, otherwise it is
hard to compete with competitor. Because they are capturing the
market.
 D Mart can start giving more franchise right. So that it can expand
its reach in the unexplored region.