The Business Model of Dmart

                                         D-Mart 

D-Mart functions in the retail industry in India which was started in 2002 and the chain of D mart stores are under Avenue Supermarts LTD. The reason why I chose D mart as the topic is not to praise their services or anything, but the real reason which intrigues me is their business model, which I don't think any other business could easily replicate. The way this business is handled and how it functions is quite impressive and it is progressively getting stronger by each year as it is reflected in their profits itself, from 60cr in 2012 to  1000cr in this current year. 

You probably heard of Radhakrishnan Damani the founder of Dmart, let me give brief info regarding him, from Dalal street investor to India's 4th richest person he is referred to as the warren buffet of India, founder, and chairman of D-Mart. 

Now let's look at the factors which make D mart above and completely distinct from the other top retail companies like future groups and reliance.

The first thing which d mart is known/famous for is, discounts and the prices yes, even if d mart stores are far off, people would dare to travel just to purchase their products from d  mart only, that much influence  D-mart has over their customers. They know that price is one such factor that can help them to capture the market share easily. So their way of pricing is generally 16-17% lower than the MRP.

What makes Dmart different than other Indian Retail Stores? 

D-mart hasn't closed any of its stores till now whereas many of the top retail stores have closed due to losses or lockdowns happening. Dmart majorly focuses on lower-income groups by attracting them with relatively lower prices and discounts, what many people ignore is that in India, almost  52 percent of the population is lower middle class besides they are the underrated group if they are the center of your business and if they are into your services, then there is a higher chance for the growth of the business. Though there are many other big competitors like Reliance, future groups and they do capitalize on the same business, the difference between dmart and other retail groups lies in their business model. Let's point out some of the ways, through which Dmart became a profitable Chain of supermarkets in India.

Systematic Expansion

Dmart at the beginning itself had a plan to systematically expand and they did it by purchasing the land with the help of profitability from the existing store, once the store starts to generate profits, it will be invested in the future stores, Now it might be a slow process at the beginning but it picks up its pace when profits from the existing stores double up by this helps the company from debt or any sort of liability, what remains is pure assets, therefore it cuts all the additional expenses as they own the land.

Everyday Low Price

Now there will be many hypermarkets or supermarkets offering weekend or month-end sales but in Dmart you can find offers and discounts every single day, as for this you could always find long cues, which results in high volume selling due to its offers and discounts. Dmart is able to pass these discounts and offers without cutting its profit margins, yes they are able to pass on the discounts and offers to customers from various sources, and these sources are :

• Cash Discounts

 In the FMGC sector, the suppliers provide the products on the credit for 1 to 4 weeks, Now the retailers have the option to pay within the credit period but if they manage to pay on the day of supply, then they will be getting extra discounts on the products. For this reason, dmart has a good relationship with the vendors also this is one such source of discounts that they pass on to customers.

• Trade discounts/volume discounts

Dmart's inventory turnover rate is records are very high as for this they get leverage with suppliers in terms of discounts. 

• Slotting fees 

Dmart charges a slotting fee from suppliers to keep their products on the shelf,

for instance, if they charge slotting fees of 5000, then Dmart will keep the 3000

and the rest will pass it on a discounts

• Location 

you may not find dmart stores in malls or any posh area, mostly it will be in residential areas mainly middle class or lower-middle-class people stay, nor do they expand capital on the aesthetic, perhaps they know that customers are more inclined toward quality products. 

So, with less marketing, No rent cost, and less operational costs they succeed in giving the customers the best price with discounts and offers every single day, without hurting their profits, unlike its competitors. 

So, this was a small study that highlighted the business model, tho it's not the unique one, it actually has its roots in how Walmarts functions but to execute such a model takes a great amount of effort and hence we see how Mr. Radhakrishan Damni proved us that if you are dedicated and if you truly believe and have passion towards your work then  it will eventually yield its desired  results