By Harsh Doshi
There are quite a few reasons for the glorious run that D-Mart has been enjoying for over fifteen years since its inception. The rise has been so meteoric that it has even led to Mr. Kishore Biyani of the competing Future Group stating publicly in an interview that there is something for him to learn from the business model of D-Mart.
Humble beginnings to stratospheric success
Radhakishan Damani, the owner of D-Mart had humble beginnings. He was an investor in the stock market before he took up a 5000 sq ft Apna Bazaar franchisee in Nerul, near Mumbai. From there, he went on to build a chain of 118 stores under the D-Mart brand in the western part of India, covering most major cities.
Today, the valuation of D-Mart is Rs. 39,400 crore, which is more than the combined market capitalisation of Future Retail and Aditya Birla Fashion combined.
The loyal consumer base decoded
One of the primary reasons for D-Mart’s dedicated customer base is its low prices. For one, there is a minimum 3% discount on every product off its shelf. Secondly, the store decor is simple, even for the ones situated in urban localities This does not drive away any strata of consumers and they keep returning. This, coupled with low prices, means that bulk buying is a very common phenomenon, on the demand side.
On the supply side, a D-Mart supermarket has a fortnightly payment arrangement with all its suppliers, unless otherwise arranged for. This is among the shortest credit periods in any industry and calls for better working capital management. However, the better part of the retail business is cash paid immediately on sale of products. This gives D-Mart enough breathing space to pay to its suppliers. It also converts into good supplier relations, helping in bulk ordering and extremely competitive pricing.
Innovative business planning
There are a few other salient features of D-Mart which have led to its dominance in the Indian business scene. None of its store sites are on lease, which helps in saving rental costs. Though the number of stores is lower than that of its competitors which are present pan-India, the turnover per store is higher.
Furthermore, D-mart did not plunge into all markets at once. It started with groceries and slowly ventured into kitchen utensils, furnishings, stationery and fashion. This let D-Mart follow the same process of trust building with suppliers and customers both for every segment ensuring higher sales and smooth repayments to suppliers.
All these reasons have been instrumental in the slow but steady success of D-Mart over the years.
Featured image source: Shutterstock
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