What RK Damani's DMart is doing to boost market share as competition gets tougher

Even as competition is getting increasingly hotter in its segment, DMart has been planning and executing its strategy over the past few months to keep pace. This involves setting up more stores within the country and expanding its reach to urban and rural customers, to penetrate further into its e-commerce operations and increase customer base.

Management has clearly indicated that it will add 60 stores in the next two years (FY21 and FY22). Over the past two years also the company has been growing rapidly, increasing the number of stores and will continue to do that in future as well. In FY19, the company added 21 new stores while in FY20, 38 stores were added.  DMart operates 214 stores across India, and remains bullish on India’s long-term consumption story. According to a statement by company, "Our expansion plans are well-aligned to this, and we continue to be on the lookout for locations within our clusters and outside, where we can build new stores that can service our target customers."

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It added, "The challenges are likely to continue in the current financial year as the economy gradually opens. Our new store openings will be impacted as construction activity will commence with some lag due to availability of labour and material. We are also incurring additional costs for maintaining COVID-19 standard hygiene protocols in all locations. Overall gross margins will be under pressure as discretionary high margin categories are not yet at near pre COVID-19 levels while food and essential sales is already near pre COVID-19 levels."

Over the years, retailing in India has been one of the most dynamic and fast-paced industries, which has travelled through different phases. In 2019, India‘s GDP is estimated at 141 trillion, of which private consumption constituted 57%. Retail sectors form around 80% of private consumption at constant prices. India‘s GDP growth will therefore translate to an increase in the merchandise retail market, from 34 trillion in Fiscal 2014 to 66 trillion in Fiscal 2020.

Sector growth is primarily driven by rapid urbanisation, changing demographic profile, increasing middle-class disposable incomes, increased digitalisation and technology adoption, evolving preferences, brand awareness and rising discretionary spending. The rising e-commerce wave also significantly contributed to the overall growth of the sector.

(Authored by Rahul Kamdar)