Dmart : The Indian Walmart

Abstract

DMart, operating under Avenue Supermarts Limited (ASL), has emerged as one of the most successful supermarket chains in India. Most notably, since its inception in 2002, it has been making profits consistently. It distinguishes itself through its “everyday low cost everyday low price (EDLC–EDLP)” strategy. The founder, Radhakishan Damani’s long-term focus has been instrumental in the phenomenal success of this retail brand. The firm has steadily expanded using a cluster-based approach through which it opens new stores in areas where it is already present, before venturing into new territories. It prefers to own its stores rather than to rent the premises, and already owns approximately 85 per cent of its stores. As of March 2020, DMart is valued at about six times its initial issue price of Rs. 299 and has a price-to-earnings ratio of 96. The retail landscape in India is undergoing change with aggressive competition from domestic as well as international retailers, both offline and online. Consumers were increasingly embracing online grocery shopping. Growing at an annualised rate of 31 per cent, e-commerce constituted 25 per cent of the organised retail market in 2018. Many retailers began to develop an omnichannel presence to attract and retain customers. Amidst all these developments, DMart has to chart out its future growth strategy. Should it stick to its age old strategy and focus on bringing more efficiencies to its EDLC–EDLP model or should it add another store format to its existing stores? Should it concentrate more on its online business? These are some of the questions the company needs to deliberate upon.