1 slide for evolution from research paper

There is an unsaid rule in the market that, “one must not open any store within a 1km radius of
DMart, simply because, no one can beat them on prices.”

DMart’s success is focused on three pillars Customers, Vendors and Employees.

1. Customers: Since DMart is targeting middle income households, all their stores are in, or close to,
residential areas and not in malls. Their idea is not to meet every consumer need like other
competitors, but instead, DMart aspires to meet most regular consumer needs, while providing
value for their money and since, 90% of these stores are owned directly by DMart, they don’t have
to worry about monthly rentals and their rise, or relocation risk. Additionally, this is helping them
build assets on their books. This also helps to keep DMart well capitalized and debt-light, while its
operations generate spare cash. All the money that is saved using this strategy is eventually offered
back to the customers in the form of discounts.

2. Vendors: 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”.

3. Employees: It is the third pillar of their model. DMart offers good money, flexibility,
empowerment, and relaxed & efficient work culture. They even go on to hire 10th standard
dropouts with the right attitude and commitment. They prefer hiring raw talent, and then invest
heavily in training, to mold them as per their requirement. Employees are just told once about the
value system and policies at D-Mart and then are empowered by giving them the freedom to
operate without somebody constantly looking over their shoulders. There is absolute clarity on what
needs to be achieved, but you don’t need to fear targets.
Is DMart a well designed organisation?

Fit Tests

1. Market Advantage Test

DMart has a defined target segment of middle-class consumers who want to save money on
everyday items and are generally very price elastic. Groceries being a regular expense,
everyone wants a discount since it can shift the budget of a consumer very easily. DMart
stores have a very basic design and does not focus spending a lot on pomp and show. This
enables it to provide its target segment with the lowest priced goods.

2. Parenting Advantage Test

In the initial years, DMart’s corporate office was run out of one of the early stores. The
founder Mr Radhakishan Damani worked together with his team as a unit without any
barriers or hierarchy levels. The corporate understood from the very beginning that DMart
needs the right blend of professionalism and entrepreneurship and this has been their
culture right from the start.

3. The People Test

The key players of DMart are its employees and key executives. DMart offers good pay,
relaxed working culture, flexibility and empowerment. They even hire 10 th class dropouts
and then invest heavily in training and upskilling them. They are then given the freedom to
operate independently without constant supervision. There is also less emphasis on fulfilling
targets.

4. The Feasibility Test

DMart is a majorly offline retailer, and this has created a feasibility constraint when it
competes with e-commerce retailers. Although, it has entered the online segment through
its ‘DMart Ready’ app, however, it will take some time to compete with other competitors.
This especially created a lot of problem especially during the Covid-19 pandemic.
Good Design Tests

1. Specialist Cultures Test

There are no special units at DMart that need insulation from other departments. There is
very low Research and development in this business.

2. Difficult Links Test

The focus of DMart is to provide the lowest prices to consumers. This belief has also been
strengthened through its mission and vision statement. The procurement and marketing
department have very different objectives. While the procurement division wishes to
purchase inventory at a lower price, the marketing department is focussed on large scale
advertising which increases cost. However, DMart has always focussed on low-cost
advertising such as flex, hoardings, newspaper ads, etc and this policy has been resonated
throughout the company This avoids a conflict between these 2 departments.

3. Redundant Hierarchy Test

There seems to be no such redundant hierarchy at DMart based on our research. Different
levels have sufficient autonomy to take decisions without constant overlooking. For e.g.
Purchase department is provided with sufficient bargaining power during negotiations
with suppliers.

4. The Accountability Test

There are no specific sales targets given to its associates. DMart does not depend on its
employees for its sales. It allows its well established systems and low-cost mantra to drive
its sales.

5. The Flexibility Test

 DMart faces threat from online retailers. DMart owns majority of its stores instead of
renting them and this leads to a huge investment in capital expenditure. This could
become an impediment to future growth opportunities. However, DMart has been
offering online deliveries and has converted 2 of its stores as fulfilment centres for online
deliveries instead of closing them during Covid-19. Although DMart is more focussed on
physical stores but its design does not impede it to take advantage of future business
opportunities.

https://www.researchgate.net/publication/
340081826_Strategy_and_Success_of_DMart_The_Case_of_Retail_Chain_in_India

https://www.forbesindia.com/blog/supermarket-wala/how-dmart-became-a-solid-homegrown-
regional-supermarket-chain-in-india/

https://startuptalky.com/dmart-case-study/

https://tradebrains.in/how-big-is-dmart/

Annual report