Last updated on September 30th, 2020 at 10:19 am
DMart Business Model is very profitable and Interesting. The business model of DMart will help you to grow your business with proper planning and the right decision at the right time.
As we all have seen so many advertisements of Vishal Mega Mart, Big Bazaar, Shoppers Stop and many more stores.
There was a time when we have seen Subhiksha department stores everywhere as well as we have also seen Big Bazaar Stores, Reliance Retail Market, Walmart, Shoppers Stop, Spencers Retail etc.
Among these top brands, Dmart makes its entry and became India’s most successful supermarket chain.
A Short History Of DMart
Dmart is a supermarket chain across India, founded in the year 2002 by India’s most famous investor Mr Radhakishan Damani.
It is owned by ‘Avenue Supermarkets’ and the success of this company goes to Radhakishan Damani.
Before DMart was founded, Radhakishan Damani’s name was legendary in stock markets or Bombay Stock Exchange.
Damani was a commerce student and he dropped out after 1st year of his graduation. After dropping out, He joined his father’s Ball Bearing business and started to invest in the stock market.
Radhakishan Damani started investing in the stock market when he was 32 years old. After some time he became one of the best and biggest investors of the 90s.
You have heard about Rakesh Jhunjhunwala who is India’s current Warren Buffett. Rakesh Jhunjhunwala considers Radhakishan Damani to be the best mentor for him all the time.
Now you can consider who is Radhakishan Damani and why DMart Business Model is very successful.
After achieving success in the stock market by investing in consumer-facing companies.
He decided to start his own business then Radhakishan Damani started DMart in 2002.
Radhakishan Damani started DMart from 2 stores in Maharashtra.
Till 2020 DMart has 176 stores across 12 states in India.
DMart that is owned by Avenue Supermarts was a private company till 2016.
The first time, Avenue Supermarts raised Rs. 1,870 Cr. fund from IPO in the year 2017.
The share of the company was listed at 114% premium and that reflects the positive aspects of investors toward the Avenue Supermarts.
Share of this company has given the growth of more than 60% in three years that shows the excellent DMart Business Model.
DMart Business Model
A strategic business model is very important for any business to expand, flourish and stand against the competitor to win.
DMart Business Model is also splendid and has become the most profitable supermarket chain in India. DMart always makes sure to available products to their customers at low-price.
Let’s understand the DMart Business Model:
B2C DMart Business Model
DMart Business Model operates on Business-to-Consumer business model, Where goods are sold by DMart directly from manufacturer to DMart customer.
The company sells everyday products for instance food items, non-food items, General Merchandise, Apparel and many more.
They mainly focus on the day-to-day needs that help DMart to make more profit.
Personal Property Not On Lease
Yes, DMart never takes land or buildings to open the new store. They own their own land and building.
One thing has come to your mind that if DMart owns its land and building then they require massive capital, so how did DMart open its stores across India in less time?
So the answer is that they played a strategy to open their new store with the help of the previous DMart store.
Let me explain in brief, DMart generates some percentage of amount from their already established stores profit and once the amount is sufficient for construction building and purchasing new land then they invest in new DMart store.
The percentage amount generated from the other DMart store is sufficient every year to start the new store.
This strategy is very interesting and also part of DMart revenue model because they are investing in their own property and eliminating a big amount of rent.
This rent amount, they utilise for giving salary to their employees every month instead of paying a big amount to the owner of building or land.
With the help of the same business model of DMart, they opened more than 170 stores across 12 states.
DMart Revenue Model
The Revenue Model Of DMart is very profitable and one of the best revenue models of supermarket chains as compared to other supermarket chains.
Let’s understand the DMart Revenue Model in-depth:-
Entry Fee For Products
DMart Business Model is Business-to-Customer and DMart has a huge number of customers.
The manufacturer makes a payment to DMart for the goods kept by the DMart on its superstore for sale.
That amount is slotting fee or Entry Fee.
This revenue model of DMart helps to generate revenue from their manufacturer also. This strategy helps the manufacturer to high its product demand in the market.
For instance, if you are a manufacturer and want to introduce a new product in the market then you can pay a slotting Fee to Dmart for placing your new product in the store.
It will help you to generate more demand for that product for the manufacturer and help to market analysis of your product in a different geographical area.
A slotting fee paid by the manufacturer to DMart indirectly reduces the product purchasing price for DMart.
That is why Dmart gets an advantage to sell the product at a discounted price, for instance, you can see lots of products sold by DMart are less than the MRP that helps to attract a large number of the customer.
DMart’s Own Products
Yes, DMart has its own product and you can see on the store, DMart’s product with the label of DMart.
If you are going to a DMart store to buy Moong Whole so you can see DMart label products with other brands.
This Business strategy of DMart to put their own product with different price and quantity then other brand products helps to show their products and increase demand.
For instance, Rice of DMart brand for 5 kg after discounted is Rs.318 and Rice of the other brand for 3 kg on MRP is 195 so these types of price and quantity strategies help DMart to earn more with their own product.
List of the product own by DMart that helps to play a crucial role in DMart Revenue Model.
In the category, Dals and Pulses DMart sold more than 40 types of Dals and Pulses like Moong Dal, Tur Dal Premium Gujarat, Moong Whole, Premia Soyabean etc.
Slat, Sugar, Jaggery
Rice and Rice Products
More than 26 categories Dry Fruits
Masala and Spices have more than 57 different categories like Premia Green Elaichi, Premia Dry Coconut, Premia Black Pepper and many more.
Flours and Grains
Cooking Oil and Ghee
This all the product makes DMart Business Model more profitable. DMart sold its own label product on their departmental store as well as on DMart reddy which is the online E-commerce website of DMart.
Success With Low-Cost Business Model
DMart is successful because they always focus on selling products at low cost by minimising its expenses.
If you go to a DMart store in two different places you will observe that the building’s interior is the same and that is done with the low-cost concept with effective utilisation of space.
For Instance, DMart store’s space planning is very fantastic that helps to put more shelf for product apart from this you can see they try to install less number of billing counter that helps to save hiring cost of the employee.
Cash Discount And Volume Discount From Manufacturer
If we talk about the credit cycle of DMart, that is amazing because they pay the manufacturer for the purchase of goods in less time as compared to other retail operators.
This is an advantage for DMart to receive cash discounts from the manufacturer and make more profit as compared to other departmental stores.
If we talk about the volume discount so this is also a good strategy of DMart to reduce the purchasing cost by purchasing in the bulk quantity.
The manufacturer gives a volume discount to DMart for bulk purchase.
Target To Regional Market Product
DMart tries to put products according to demographic or need of the consumer.
It sells famous local goods with the help of tieing up with the local manufacturer and sells those products at a very attractive price.
This strategy of DMart is very effective and makes the DMart Business Model different from other departmental stores.
For example, many big stores sell products that are famous in the country but whereas DMart also focuses on the needs of the customer and sells local goods at their store.
Daily Discount Strategy
DMart target audience is the middle-class family that’s considering the target audience; they provide daily discounts to their customers where other stores used to give a discount on festivals and weekends.
The aim of DMart is to provide their customer with all goods at low-cost, this strategy of DMart gains the trust of its customer.
DMart’s E-commerce Portal
DMart Ready is an online portal launched by DMart that includes all the products that the physical store has.
The number of customers of DMart is huge and this online portal plays a vital role to connect their customers.
DMart Ready has the home delivery option but they charge some delivery and if you don’t want to pay so you can pick your purchased items from DMart pickup point without paying any delivery charges.
This concept of DMart helps to reduce the crowed of the customer on their physical stores and fulfil the need of the customer.
Focus On Consumer Behaviour
DMart always tries to focus on their targeted consumer by offering a variety of products at minimum cost according to geographical areas.
The low selling price creates a psychological aspect for their customer to buy more.
And this concept also helps to create trust of the customer.
COVID-19 Lockdown Impact On Dmart Business Model
We have seen the impact of COVID-19 in every sector. Dmart also affected by these crises. If we talk about the January-March quarter then the overall revenue has grown by nearly 23% to INR 6,194 crore but when the lockdown imposed on the country then their revenue went down from march.
If we compare revenue generated by Dmart in march 2019 to march 2020 then the revenue grew by 11%. The major impact of lockdown on Dmart we can see in April month because this is the month when the lockdown was strictly imposed and that causes Dmart revenue was down by more than 45 per cent as compared to last year April month.
If we talk about the may month then government relaxation helped Dmart to generate 17% more revenue as compared to 14 days of April 2020.
Conclusion: DMart Business Model is very profitable. DMart case study is very interesting, every businessman should analyze this case study to grow their business. Overall DMart is growing day by day. And the entry of DMart Ready has also become a strong platform for DMart to grow faster.