Creating Great Value
DMart is continuing its mission to fulfil the customers’ everyday needs by providing good quality products at low prices
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Venue Supermart is popularly known as DMart. The company says its customer-centric approach has helped in achieving credible growth thus far. DMart was conceived by value investor Radhakishan Damani in the year 2000, operating a single store in Maharasthra. With a mission to be the lowest priced retailer in its area of operation, DMart has grown steadily over the years and operates 176 stores in 11 states and 1 UT of India. The Company has delivered stable performance across stakeholder metrics by focusing on financial fundamentals, high levels of patience and strong conviction.
It is interesting to note that the company that is now part of an elite list of ‘Fastest Growing Companies’ in India, it took DMart eight years to start its first 10 stores. The company said: “This wasn’t because of dearth of investment opportunities, but more because of the belief of the promoter, Damani in the importance of validating the business model from a perspective of both profitability and scalability. His beginnings at DMart were frugal. For a number of years since inception, DMart’s corporate operations were run from a small space, carved out from one of the early stores,” the company said. “He and his early leadership team worked together as one cohesive unit without any hierarchy or barriers,” it cited as one of the reasons for its success in later years.
“At DMart, we follow a cluster-based expansion approach. We thus focus on deepening our penetration in the areas where we are already present, before expanding to newer regions. Using this strategy, we added 21 stores in FY 2018-19,” the company said in its latest annual report.
The key product category at DMart Stories can be characterised into broadly three different heads. Foods, Non-Foods, General Merchandise & Apparel. It is the foods business, comprising of Dairy, staples, groceries, snacks, frozen products, processed foods, beverages & confectionery and fruits and vegetables that together contributed 51.25 per cent revenue contribution in FY19. It was the non-food FMCG that contributed 20.46 per cent to the overall revenue kitty.
“The company ended the year with 176 stores, adding 21 new stores. They admitted that could have done better. While all operating metrics were good, I am personally disappointed with our store opening outcomes. It is partly structural and partly our own weakness,” says Ignatius Navil Noronha, the company’s MD & CEO. “I say structural because we typically prefer to buy land and then construct the buildings. Real estate in our country is extremely localised and therefore challenging, different languages and different nuances also add to it,” Noronha added. “We are working mighty hard on this... we hope to make good progress over the next few years. This year operating metrics such as Same Store Sales Growth (SSSG), operating expenditure, turnover per square feet and revenue run rate of newly opened stores was very encouraging,” he added. Within those high points, SSSG pleasantly surprised the company. It partly compensated for the unsatisfactory new store additions. SSSG is tough to predict as different levers operate during the year, it said.