This will be a submission round!

Every team has to submit a 2-slide PPT, choosing the

sector and brand to work with. The submission should explain the team’s understanding
of the retail strategy and the challenges faced by the chosen brand.
The submission should ideally cover the following for the company's primary product
range:\

HISTORY:
Avenue Supermarts Private Limited on May 12 2000 at Mumbai Maharashtra as a private limited
company under the Companies Act 1956. Subsequently the name of the Company was changed
to Avenue Supermarts Limited due to conversion from a private company to a public company
pursuant to a special resolution passed by the Shareholders at an extraordinary general meeting
held on February 1 2011. Pursuant to the aforesaid change of name a fresh certificate of
incorporation was issued to the Company by the RoC on May 3 2011.The supermarket chain of
DMart stores is owned and operated by Avenue Supermarts Ltd. (ASL). The company has its
headquarters in Mumbai. The brands D Mart D Mart Minimax D Mart Premia D Homes Dutch
Harbour etc are brands owned by ASL. DMart is a one-stop supermarket chain that aims to offer
customers a wide range of basic home and personal products under one roof. Each DMart store
stocks home utility products - including food toiletries beauty products garments kitchenware
bed and bath linen home appliances and more - available at competitive prices. The company's
core objective is to offer customers good products at great value.DMart was started by Mr.
Radhakishan Damani and his family to address the growing needs of the Indian family. From the
launch of its first store in Powai in 2002 DMart today has a well-established presence in 154
locations across Maharashtra Gujarat Andhra Pradesh Madhya Pradesh Karnataka Telangana
Chhattisgarh NCR Tamil Nadu Punjab and Rajasthan.In 2007 DMart entered Gujarat with its first
store in the state. In 2010 the total store count of our company crossed 25 stores and the
audited consolidated revenue crossed Rs 1000 crore mark. In 2012 the store count of the
company crossed 50 stores. In 2014 the store count of our company increased to 75 stores. In
2015 audited consolidated revenue of the company crossed Rs 5000 crore mark. In 2016 the
store count of our company increased to 110 and the consolidated revenues crossed Rs 7500
crore mark. On 30 September 2016 the company filed Draft Red Herring Prospectus and on 2
March 2017 filed Red Herring Prospectus with SEBI for raising Rs. 1870 crore. The IPO was open
through the book building route from 8 March 2017 to 10 March 2017 with Price Band of Rs 295
to Rs 299 per share. The Issue got subscribed 73.41 times leading to its Issue Price being fixed
at Rs 299 per share. The Shares got listed on BSE and NSE on 21 March 2017. The stock
debuted at Rs 604.40 on BSE which is 102.14% above issue price.On 2 February 2018 Avenue
Supermarts (ASL) announced that the company has completed the acquisition of 4.35 crore
equity shares of Rs 10 each fully paid-up of Avenue E-Commerce Limited at a price of Rs 11.30
per equity share aggregating to Rs 49.21 crore. Pursuant to this Avenue E-Commerce Limited
has become a wholly-owned subsidiary of the company. Before the acquisition of additional
shares ASL held 49.21% stake in Avenue E-Commerce Limited. Earlier ASL's Board of Directors
at its meeting held on 25 January 2018 had approved acquisition of additional 4.35 crore equity
shares constituting 50.79% of the share capital of Avenue E-Commerce Limited an Associate
Company from other shareholders for total consideration of Rs 49.21 crore. Avenue E-Commerce
Limited is engaged in the business of online retail of food products and groceries in India. The
company clocked turnover of Rs 1.20 crore in 2016-17.On 7 March 2018 Avenue Supermarts
(ASL) announced that the shareholding of the company in Avenue E-Commerce Limited has
reduced from 100% to 99.66% pursuant to the allotment of shares on preferential basis by
Avenue E-Commerce Limited to ASL and other applicants of the issue.

We remain focussed on our strategy of offering our customers good quality products at great value,
based on the Everyday Low Cost/Everyday Low Price (EDLC/ EDLP) principle.
Retail Strategy: 1. Product mix: Only sells food,, non-foods, general merchandise, apparel, other
daily products. To sell products in demand throughout the year. Consistency in sales and lower shelf
life. Targetted low and middle class's daily household needs. Not a centralized model. Avoid private
vendors
1. Brick and Mortar stores: Actually owns the stores they operate in. 95%of stores are directly
owned and reamined are taken on a 30 year lease. Ensures the retail chain grows
organically. Prperty value also grows over the years. It is a long-term strategy. Inspired by
Walmart.
2. Strategic locations and designs: Avoids mall, inflated rents. Suburbs of metros, tier-2 and 3
cities. Simple stores. Main competitors - local kranas. Gets customers similar to theirs, which
is ther target audience.
3. Relationships with suppliers: All retail business operates on credit. Clears it in 11th days and
always maintains assured payment in 15 days. Others work on a 60 day period. This helps
secure purchase orders at discounted prices.
4. Discounts: Offers products at 6-7% lower price. All this is possible due to the above
strategies.

High valuatS:

a) The retail channel design including the channel levels and players

b) Since location is the

most
c) expensive and critical
decision in retail, D-Mart
ensures it doesn’t burn money
by a compact
d) supply chain and staying
away from malls. The
concentrated supply chain
means not
e) spreading their footprint
far and wide. In fact, until
2014, it was present only in
4 states. It
f) follows a policy of
opening 75% of its new
stores in existing states or
markets. In terms of
g) formats too, it has limited
itself just to 2 size formats,
and choosing between them is
based on
h) Since location is the
most
i) expensive and critical
decision in retail, D-Mart
ensures it doesn’t burn money
by a compact
j) supply chain and staying
away from malls. The
concentrated supply chain
means not
k) spreading their footprint
far and wide. In fact, until
 2014, it was present only in
4 states. It
l) follows a policy of
opening 75% of its new
stores in existing states or
markets. In terms of
m) formats too, it has limited
itself just to 2 size formats,
and choosing between them is
based on
The relationships with vendors are the second pillar of their model. Since he comes from a trader
background, his vendor relationships have been his biggest strength. The FMCG industry has a
payment norm of 12-21 days, but DMart pays its vendors on 11th day itself. This helps him stay in
the good books of the vendors and avoids stock outs and since DMart Avinash Pawar and B. V.
Sangvikar NIDA International Conference for Case Studies on Development Administration 2019
(NIDA-ICCS 2019) 8 buys in bulk and pays its vendors well in time, they also get to earn higher
margins. Basically, their strategy is to “Buy it low, Stack it high and sell it cheap”.

DMart bought good volume of goods from the distributors and instead of requesting them to extend
a credit line to DMart. They assured Payment of Goods in about 15 days. Other players work usually
on a 60-day credit line. No comparable competitor competes with DMart on this and DMart gets
extra margin for quick cash. Behind the scenes, this fast turnover is what it uses to negotiate with
wholesalers and companies for better prices. This doesn’t mean arm-twisting suppliers though. In
fact, payment to most suppliers are arranged fortnightly. This is among the shortest credit periods in
any industry.

Full ownership of space: DMart have their own properties. Over a period of last 10 years, this
strategy has made perfect sense because, now these properties have all appreciated in value and
they do not have to pay any rent, which is usually the most major cost factor for a retailer which
resulted in higher margins.
Low Private Brands: They offer a lesser array of top brands for a particular product when compared
to other shopping malls. This is because , they contract people to directly manufacture products.
This ensures elimination of distributors and middlemen. Now since, they have volume bargaining &
cash power, they negotiate best margins. Some of which are passed to the customer and remaining
become profits along with better control on the supply chain. Similarly, contrary to other chains, it
does not have private labels, nor does it offer a wide choice of brands in each segment. The focus is
clear: daily consumption goods + known brands only + limited options = ultra-fast turnover.

Elimination of Intermediaries: DMart uses bargaining power to negotiate with top brands by
eliminating distributors. While, the best of brands make an exception for them because the sales
volume is too large to ignore. This strategy has caught up with other retailers too.

Since location is the most expensive and critical decision in retail, D-Mart ensures it doesn’t burn
money by a compact supply chain and staying away from malls. The concentrated supply chain
means not spreading their footprint far and wide. In fact, until 2014, it was present only in 4 states.
It follows a policy of opening 75% of its new stores in existing states or markets. In terms of formats
too, it has limited itself just to 2 size formats, and choosing between them is based on

location and shopper density. While, not being in malls helps the chain to keep retail costs low. It
also believes in owning the retail space so that rental costs are low. In places where owning is not
possible, the store is on 30-year leases.

b) Depth vs breadth of the retail channel

Product mix: Only sells food,, non-foods, general merchandise, apparel, other daily products. To sell
products in demand throughout the year. Consistency in sales and lower shelf life. Targetted low and
middle class's daily household needs. Not a centralized model. Avoid private vendors

Different Duckling Approach: Private labels and top-end products bring in higher margins but saddle
companies with inevitably higher inventory turnover. Offering multiple brands of the same product
also leads to similar outcomes, which is why the assortment of products and variety of brands that
one finds at a D-Mart store is often limited when compared to other retail stores.

Lowest Product Inventory Turnover: Profitability in retail is driven by a combination of profit margins
and inventory turnover. With price as the differentiator, profit margins on individual items will be
squeezed (its gross margin is only about half of its competitors). Hence, D-Mart operates in limited
product segments mainly food and groceries. Most other retail chains have expanded into high-end
segments too, but D-Mart has stayed away from them to keep inventories low and inventory
turnover high(during 2012-2016, inventory turnover was about 11.6 times in a year i.e. its stock was
bought and sold an average of 11.6 times every year).

c) Are there any gaps in the channel coverage? If yes, are those covered by other
channels, or are these unserved? If yes, why?
DMart currently operates the majority of its business via brick and mortar stores. But
the entry of online e-tailers has started to disrupt the market share of existing brick
and mortar stores. These e-tailers are highly cost-efficient and are more widely
accepted due to a simple concept of shopping at the tip of their fingers.

Avenue Supermarts have launched 'Avenue E-Commerce Ltd.,' its online shopping
portal, to keep up with the competition and the industry. But competing in this space
calls for its challenges and new players like 'Amazon,' which is a giant whale in itself.
So whether DMart will be able to keep up with the changing market scenario or not is
food for thought.

d) Retail channel participants' roles and responsibilities

Our operations are ably supported by a network of distribution centres and packing centres. As of
March 31, 2021 we had 39 distribution centres and 7 packing centres.

DMart has 110 Stores spread across Indian Cities, DMart buys products for its whole 110stores, the sales
channel is almost direct now, DMart does not need many warehouses,Inventory is at its store and consumer
picks it up, Inventory turnover is optimal which cutsdown the storage costs.With its direct bulk purchase DMart
has eliminated middleman and the commission is passedas discounts to consumers. Well, if you think all
products are cheap in DMart then you arewrong. FMCG products are used as anchor to sell its high margin
products like Toys, Fruits &Vegetables,Grocery & Staples,Crockery & Plastic Containers. Moreover, Dmart has
its own branded products in Grocery, Home & Personal Care section which has high margins.

1. Relationships with suppliers: All retail business operates on credit. Clears it in 11th days and
always maintains assured payment in 15 days. Others work on a 60 day period. This helps
secure purchase orders at discounted prices.

e) Channel margins for different members (The participants can conduct primary
research or refer to secondary sources for this)

f) Has the retail channel design impacted product range expansion decisions for the
company in the recent past?
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 22* stores in FY 2020-21, thus ending the year with 234 stores, spread across
11 states and one union territory
Isme daaldo kee they do not intend to expand their range as it is their core competency to have
limited inventory and hgh turnover ratio
SWOT ANALYSIS
D Mart has multiple stores at various location across India and also a fairly well spread outdistribution channel.
The company registered an annual revenue of 1.86 billion USD in theyear 2016 and the business is expected to
also showcase a steady growth.
Strengths
Strengths are defined as what each business does best in its gamut of operations which can giveit an upper hand
over its competitors. The following are the strengths of DMart:
Focus on long-term:
 Damani, the founder of D Mart is an investor and thus the company has been focused entirely on long-
term gains. This has made the company maximise its returnsthrough a value is driven pricing strategy.
Slow scaling up:
 D Mart started off on a very low-key note and slowly took its time to moveup the ladder. This gave the
company a better control and deeper understanding of its supplychain and also helped them manage the bottom
line better.
People-centric management style:
 D Mart has a very good employee policy in place and isvery transparent in its employee relations. They also
have a good relationship with vendors andsuppliers and the stakeholders are happy.
Discount Policy:
 One factor that delineates D Mart from its competitor is its huge discount policy. The retailer sells essential
goods at a flat discount price which most competitors cannotmatch and this helped them penetrate the market.
Clear price-based differentiation:
 D Mart never followed the trends set by other competingretail brands but believed in setting their own trends.
They captured the market through a clear price-
based differentiation and priced their goods at significantly lower prices thancompetitors.
 
Weakness
Weaknesses are used to refer to areas where the business or the brand needs improvement.Some of the key
weaknesses of D Mart are:
Focus on certain places:
 Quite unlike their competitors, who are present everywhere, D Marthas focused more on the Western States and
has a very low presence in the South. This hasrestricted them from gaining market prominence.
Slow growth:
 D Mart has established almost 16 years ago much before the retail boom set afire in India. However, it has not
been able to capture the market even as much as many of thelater entrants primarily because of its long-term
focus.
Sustainability of low pricing:
 The company has a zero-credit policy and thus vendors andsuppliers give them a much better price which is
how the company is able to afford the low prices that the competitors cannot imagine.
No frills:
 D Mart follows a no-frills approach where the focus in to cut costs wherever possible.Their facilities are basic
and lack the frills of most upmarket retailers. The customers who comehere essentially look at the low prices of
products on offer. Thus, the sustainability of thisdifferentiator is questionable.
Opportunity
Opportunities refer to those avenues in the environment that surrounds the business on whichit can capitalize to
increase its returns. Some of the opportunities include:
Technology:
 Technology has a lot to offer to retailers in terms of in-store experiences andretailer can use IoT, artificial
intelligence etc to create value-adding services to their customersfor which a premium can be charged.
Personalization of services:
 Customers are looking for personalized services for which theyare willing to pay extra. Retailers should
capitalize on this propensity to pay more and increasethe quality of their services.
Threats
Threats are those factors in the environment which can be detrimental to the growth of the business. Some of the
threats include:

 
Online retailers:
 People in cities especially are highly lethargic about leaving their homes and prefer to shop online today.
Companies like Amazon and Flipkart thus become major threatsto most retailers.
Online Start-ups:
 The hottest trend in India are online start-ups. Many of them are aggregatorswho bring together the supplier and
the customer cost-effectively. These companies are theemerging threats more so because many new brands are
cropping up in the aggregation market primarily because of lower barriers to entry.