DMART: DISRUPTING FOOD RETAILING

Group 1:

Akash Khemka DM22106

Aman Pathak DM22108

Dinakaran S DM22118

Shubham Singh DM22269

Yashasvi Sah DM22185
Q1. Look at the Kirana store in your neighbourhood, see retailers like Reliance Fresh
and Heritage and More, and now try to position D-Mart against these two in terms of
retail services. A nice 2X2 map is preferred. 

Ans.

Other Retailers
Parameters Kirana Stores (Reliance Fresh, D-Mart
Heritage, More, etc)
Location All Cities T1 & T2 Cities T2 & T3 Cities
All Brands (National,
All Brands (National & Famous National
Product Brands International, Local &
International) Brand
Privately Labelled)
All product varieties are All product varieties Limited varieties are
Product Variety
available are available available
Regular Weekly Purchase
Purchase Type (Therefore in small Bulk Purchase Bulk Purchase
amount)

Company/Brand
Company/Brand Heavy Discounts are
Suggested schemes and
Discounts/Scheme Suggested schemes are provided from the
store promotions are
provided to customers store itself.
provided to customers

They charge a
Delivery Services to minimum value of
Mostly free No deliveries
Customers around Rs 50, if located
in vicinity
Service hours 12 Hours daily 12 Hours daily 10 Hours daily
15,000 - 20,000 15,000 - 20,000
Product Range 4600 Products (Approx.)
Products (Approx.) Products (Approx.)
food, toiletries, beauty
products, garments, food, toiletries,
kitchenware, bed and beauty products,
Limited product range.
bath linen, home garments,
Product type Usually depend on the
appliances/ premium kitchenware, bed
store budget.
product categories such and bath linen, home
as high-end electronics, appliances and more
jewellery, and watches
Small Supermarkets,
Well-designed stores
Store Type Small Shops Big Super Stores
& warehouse-like
setting
Mostly in Residential Areas and Residential Area and
Location (Area-Wise)
Residential Areas Malls city outskirts
Q2. They save money on (a) operations and (b) retail services compared to a typical
modern supermarket. List those items under each group.

Ans.
A) Operations: 

1. DMart offered a limited assortment that sold very fast which further led to a high
inventory turnover ratio. This led to faster payments to suppliers and brand
manufacturers and thus the company negotiated on price with suppliers and brand
manufacturers. As DMart brought goods at a low price, they sold them at the lowest
price as compared to their competitors. 
2. Instead of dealing with many intermediaries, DMart worked closely with suppliers
and brand manufacturers which led to faster deliveries and good margins. 
3. DMart opened 75% of stores in the states or markets which already had DMart stores.
This led to lowering the risk of market dynamics. The company was able to keep its
cost lower and maintain good customer relationships due to this strategy. When they
had good customer relationships and lower costs, their sales also increased. 
4. DMart owned all its stores which helped them to save on rental costs. It bought the
land for stores in the suburbs of cities to lower the cost of acquiring land which kept
its operational costs low.  
5. DMart saved huge money when they built their stores near distribution packing
centres. The positions of stores were strategically planned to save money in
operations. Not only they built stores near distribution centres, they owned all the
distribution and packing centres also. This clustering approach helped them efficient
distribution and logistics which proved to be cost-efficient also. 
6. DMart avoided creating private labels or store brands which helped them in keeping
operating costs low and thus helped in saving large amounts.
7. Best in-store hardware’s, well-designed store layout, efficient checkouts and fully
stocked shelves led to a better customer experience. When the customer is satisfied
with the service provided by the company, their loyalty increases towards the brand
and thus they repeat purchases and word of mouth marketing takes place. This leads
to low expenditure on marketing and thus more saving for the company. 

B) Retail Services:
1. When compared to other shopping malls, they offer a smaller selection of top brands
for a specific product. This is because they hire people to directly manufacture
products. This eliminates the need for distributors and middlemen. They can now
negotiate the best margins because they have volume bargaining and cash power.
2. DMart's mix is largely limited to food, groceries, and daily products, whereas other
retail companies have rapidly expanded into multiple segments with differentiated
retail chains.
3. While private labels and high-end products bring in higher margins, they also saddle
businesses with higher inventory turnover. Offering multiple brands of the same
product produces similar results, which is why the assortment of products and variety
of brands found at a D-Mart store is frequently limited when compared to other retail
stores.
4. DMart's model is based on pricing and discounts. Consumers are offered a minimum
3 per cent discount on every product off the shelf, and in some cases, the discount is
as much as 10% off the manufacturer's suggested retail price. As we will see, it has an
impact on all chain decisions.
 5. The concept behind the establishment of DMart stores was simple: it would cater to
the growing middle-daily class's household needs by selling groceries, vegetables,
electronics, and clothing at ultra-competitive prices. DMart began offering Everyday
Low Price and Everyday Low Cost, similar to global retail giant Wal-everyday Mart's
low prices. It proved to be its most distinctive selling point and remains the sole
reason why housewives and other bargain hunters flock to its stores. Furthermore,
DMart's tight and relatively small assortment has assisted it in reducing wastage
losses.
6. Last but not the least, the store decor is simple, but even in urban areas, this does not
deter customers, who continue to return. This, combined with low prices, means that
on the demand side, bulk buying is a very common phenomenon.

Q3. Which type of customers would be "attracted" to the items listed in 2(b) and why?

Ans.
Type of Customers:
1. We would describe the type of customers of D-Mart as value-first customers because
value-first households have lower income than other types of households, they cannot
prioritize a wider variety, exotic assortment, or faster access. As a result, they
prioritize the best-priced products under discount, cashback offers, and sales, even if
it means sacrificing variety, longer wait times, or inconvenient experiences.
2. The unit economics for servicing value-first households are very promising. Most
profitability determinants, such as bulk purchase, assortment, delivery cost, and
stickiness, are always in favour of value-first households.
3. We can also say that they do cater to middle-income households, and all of their
stores are located in or near residential areas rather than malls. DMart's concept is not
to meet every consumer need, as other competitors do, but rather to meet the majority
of regular consumer needs while providing value for money.
4. DMart began offering Everyday Low Price and Everyday Low Cost, similar to global
retail giant Walmart everyday Mart's low prices. It proved to be its most distinctive
selling point and remains the sole reason why housewives and other bargain hunters
flock to its stores.

SCORE: 9.5/10