Mar 10, 2020

D'mart business model || Dmart Case Study

 D'mart business model||Dmart Case Study 

In India, we have seen so many big retail and supermarket stores, some of them are,
  • Vishal mega mart
  • Big Bazar
  • Reliance Retail Market
  • Walmart
  • Future retail 
  • Shoppers stop
  • Dmart
  • Spencers retail
In the cluster of these huge supermarket retail stores, some of them are big giants of the world, and we know the fact that the biggest retail store is Walmart, Across the globe.

So, you might have thought that Walmart would be the biggest retail store in India? the answer in your head would be yes but in reality, the answer to this question is NO!

Yes, You heard it right, the biggest retail store in India is Dmart supermarket.

In this post, we will understand the business model of Dmart.
How it becomes the most profitable store in India? in just a few years.

Dmart is founded by Radhakishan Damani in 2002 with the first store established in Powai, headquarter is in Mumbai. in January 2020 Dmart has up to 200 stores across various states of India which includes Maharashtra, Rajasthan, Madhya Pradesh, Gujrat, Tamil  Nadu, Andra Pradesh, Karnataka, Telengana, etc.

Dmart is doing really well in terms of profitability as compared to the other supermarket stores because it follows certain strategies, that others are not following appropriately.

Dmart used marketing strategy of word of mouth because of that they don't have to spend huge money on marketing.

These are the 5 most innovative strategies and tactics that Dmart is adapted to grow rapidly in a highly competitive market.

1)Slotting Fees

Slotting fees
Slotting Fees

Dmart has a variety of products on its shelves from different manufacturers and brands, Dmart charged some amount of money from these manufacturers and brands to list there product in their stores.

With Slotting Fees, Dmart gives a discount to its customers and hence they can sell the product at a very low price as compared to the other retail stores.

 for example, A soap manufacturer wants to list his product in Dmart, So for that, he has to give a massive slotting fee to Dmart to put his soap on the shelves of Dmart,

Here Dmart plays an interesting move, They collect Slotting fees from different manufacturers and used this money to give a discount to the customer, 

a manufacturer wants to increase there sales and dmart have a high volume of sales due to this competition, Dmart gets very high slotting fees because everyone wants to increase the sales of their products and hence Dmart earns a massive amount of money from this manufacturers.


Dmart Buy their own property (Not on lease)

Dmart owns its land and building, they did not take land on rent or lease. let's see  D'mart business model.

You might have a question that, if they acquire their own land and it requires massive capital investment then how Dmart is able to have this number of stores across the country?

Dmart calculated the amount required to established the new store, and then from its already established stores, they took some percentage of the
amount. Every year and once they have enough funds for the construction of a new store then they buy land for that and start the construction.

Dmart Flow Chart
Dmart Flow Chart

Dmart established the chain of its supermarket in every state by this strategy.from each store they took some percentage of revenue and used that money for the establishment of brand new Dmart store by this strategy they have almost 200 stores in India in different geological states.


The problem with this strategy is that the initial investment is very high because of that the growth of Dmart is very steady from 2002 till 2020, but growth is steady and stable.

the amount of expenditure Dmart saves on rent is one of the keys for them to save that amount and can be utilized to give the salary to the employees of the organization.


Dmart has its own products

Dmart has its own product with the label of Dmart on them.

If you visit the store to buy Turmeric then you will see the one product of Dmart and other of the different manufacturer but here Dmart has an amazing strategy,

They put their own product besides other brand products but with slightly different prices and quantities.

Example:- Turmeric of Dmart brand 200g cost you 38 rs and Turmeric of Other Brands of 100g cost you around 26 rs this is the commodities people don't have a specific preference for a particular brand, hence they ended up buying Dmart products which eventually makes the profit deal for the Dmart.

Products which plays a crucial role in profit contribution for Dmart is,
  • Wheat
  • Rice
  • Sugar
  • Dal
  • Poha
  • etc
all the products which Dmart gives are the parts of  D'mart business model.

Controlling the Expenditure

Dmart stores didn't have a very attractive infrastructure and the shelves are kept very close to each other, which makes space congested, as the land for the building is not very big so they used that space accordingly.

As you can see Dmart doesn't provide luxury like other malls provide, like air conditioning, Food counters, Cafeteria, Dominos, KFC, etc.

One of the advantage Dmart gives to its customer (manufacturer) by giving them payments in 5-7 days, because of that customer gives a discount to Dmart on bulk buying(high volume buying) which demart uses to give the discount on the product.

Dmart used to pay its payments to suppliers 5-6 days where others take up to 4 weeks. this is called the credit period because of that supplier gives discount to Dmart for fast payments

Dmart Targets Demographic Markets Product

Dmart tries to puts product which is famous in the local area by tieing up with local vendors and sells them at very attractive pricing.

In big stores like big bazaar and all they used to sell the goods which are famous at the national level but Dmart also includes famous goods from that particular state and region.

Dmart provides Daily discounts to the customers where other stores used to give discounts on weekends, festivals and seasonal criteria. 

Dmart is really quality conscious so they took the best quality local products in its stores, because of that it wins the customer's loyalty for the quality of products.

Let's LOOK AT SALES TABLE
SALES YEAR
592 9-Mar
1034 10-Mar
1582 11-Mar
2204 12-Mar
3334 13-Mar
4680 14-Mar
6433 15-Mar
8575 16-Mar
11887 17-Mar

As you can see from the above table that dmart sales are growing rapidly;y year by year and all these sales are in 1000(k) which reflects how much sales Dmart is actually doing which is a great sign of the ultimate business model.


Dmart Ready (online portal)

Online Dmart portal
Online Dmart Portal

Dmart launched its own online portal called Dmart Ready which has all the products that the physical store has.

They provide home delivery but they charged the amount of money for that and they have one more option for the online portal, you can order online and they have there owned pickup points from there you can pay your bill and collect your order.

As the crowd spontaneously increasing in dmart stores this idea of digitalization will help them to sell their products online as well as offline.

IPO Of Dmart

Dmart parent company Avenue Supermarts issued IPO in 2017, the Share price of the dmart is also following the growth of Dmart.

presently the price of a share of Dmart is 2170/- (-3.11%).

Founder of Dmart Mr.Damani also invested in ITC, Gillette, VST industries.


 If you like my Analysis and want to say something then comment box is yours.

Thank you for reading and if you like my post do share this article.

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