Business Model of DMart | Why is DMart Successful than other retailers

Anagha S Anagha S
Jul 25, 2021 5 min read
Business Model of DMart | Why is DMart Successful than other retailers

In an era where everybody seems to become a successful entrepreneur, it is the aptness of a business model that makes all the difference. The company should be able to realise the nature of their target customer to make the best out of the situation.

Today the retail business is a very popular form of business among consumers. Here the company sell goods and services at a very low price through large distribution channels. In this form of business, a prompt understanding of the nature of customers is the most important.

DMart is one such important player in the retail industry which has successfully garnered a top position despite being a latecomer. There is absolutely no doubt that it is the unique business model of DMart that helped it to have an excellent debut in the industry.

About DMart
What makes DMart unique?
Slow and Steady Wins the Race
FAQ

About DMart

DMart is a supermarket chain that is spread across 12 states in India. It is owned by Avenue supermarkets and was founded by Radhakishan Damani who is one of the most famous and successful value investors of the country, in the year 2000. It started with two stores in Maharashtra and is now a large chain of 176 stores that are spread across 12 states in India as of 2020.

In the year 2017, the company went public with an IPO of Rs 1870 crore. DMart got listed at the price of Rs.632 and as of 15 July 2021 its average trade price is Rs.3316. The shares of the company have grown more than 60% in just four years.

It is the sheer understanding of RK Damani about the market condition, the nature of the customers and the ability to have a very cordial relationship with the vendors that helped him and his company to get to the place that it is in now. He was successfully able to maintain a healthy attitude amongst the investors by adopting a very strong business model that ensured a healthy Return on Equity.

Revenue of DMart across India
Revenue of DMart across India

What makes DMart unique?

As mentioned earlier the uniqueness of DMart's business model has helped the company flourish phenomenally to become one of the most profitable supermarket chains in the whole of India.

Business to Consumer Model

Those who have gone to DMart will be aware of the extremely low price of the products available. This is because of the business to consumer model that it has adopted. Here as the name suggests, Products are directly taken from the producers or the manufacturers and given to the end-user.

Another reason why this method is successful is because of the nature of these goods. Most of them are things that we need on a day to day basis and hence the demand is consistent. It gives a lot of stability to the business as a whole.

Cost Involvement and Utilisation

It is well-known that any company will have to incur certain expenses for the smooth conduct of businesses. These include the cost of the location, salaries of the employees, expenses related to maintenance et cetera.

DMart has efficiently crafted its business model in such a way that it finds opportunity in these expenses as well. Most of its stores are built on their own land which reduces their expense of rent and leases immediately. The rents being one of the highest costs for any retailer, its ability to open stores on their own land saves the firm from that obligation.

There are absolutely no middlemen in the business of DMart. It ensures that they get the product for the best price and is directly given to the end-user which further helps them save a lot of money given as commission to these middlemen.

Unlike most of the retail stores, DMart pays their suppliers within just 10 days instead of the usual 60 days. This not only makes DMart a special customer to the suppliers but also gives it more power for negotiation.

Apart from that most of the employees are hired on contract. They are constantly trained for skill development and multitasking which saves the cost for DMart with regard to additional employment. This training ensures that the stores can be run smoothly with the existing number of employees.

An efficient relationship with suppliers is a very important part of the retail business and RK Damani has aced this task too well. Due to his excellent relations with the vendors and suppliers since the beginning of the business, he is able to maintain an extremely efficient supply chain that helps him constantly restock their inventory on time.

Knowing the Customer

One of the most successful marketing strategies of DMart is its discounts and customers. There is absolutely no doubt that DMart thrives through word of mouth marketing. It is its best advertisement. Their discounts are ever-increasing and endless. Along with that, they have an inexhaustible availability of products which makes them a favourite choice among the middle class.

The strategies of DMart is close-knitted with the innate nature of a common Indian who always looks out for the best price and is ready for a good bargain. RK Damani knowing the pulse of the customers successfully curated DMart's business strategy in a way that suits both the customer and his business.


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Slow and Steady Wins the Race

Despite all the discounts and low prices, DMart continues to earn profits of more than 9 billion per year. They have never incurred losses in any of their stores since its inception 20 years ago. This is mainly because RK Damani and his team believe in moving slow.

Unlike other competitors in the industry like Reliance retail whose expansion rate is over 714 stores every year, DMart opens less than 10 stores every year. They focus more on value retailing. Although the expansion of the stores in terms of number might look slow, there is no doubt about the survivability of the business in the long run.

With their very focused vision and a carefully curated network of supply chain and engagement, there is absolutely no doubt that DMart will continue to flourish in the market in the coming years as well. The success of DMart is an example of the fact that being lean in business can also help you be successful and survive even in the harshest of market environments.

FAQ

What is the revenue of DMart?

The revenue of DMart is 24,930 crores INR as of 2020.

Who is the founder of DMart

DMart was founded by Radhakishan Damani in 2002.

Is DMart an Indian company?

Yes, DMart is an Indian company founded by Radhakishan Damani and is owned by Avenue supermarkets.

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