D-mart is a household name in many middle-class households.
The brand has deep significance when it comes to the lives of many.
The brand is so magnetic and popular that it has become a landmark in many areas.
This relatively new brand now competes with huge retail market giants like Reliance and Big Bazar, in fact earning better profits than all its competitors.
This small brand’s share is considered one of the most expensive retail shares in the whole world.
This brand has been able to increase its share price from 616.50 INR in 2017 to 3703 INR as of 17Th May 2020 which is more than a 500 per cent increase in just 4 years.
While the profit margins have increased by 1700 per cent from its inception to this date.
How has this company been so successful? How has it been able to compete in the markets with giants? What are its strategies let us find out?
First some background of the company, D- Mart was started by Radhakrishna Damani, in 2002.
Its first store was opened on 15th May 2002 in Powai, Mumbai-Maharastra.
Radhakrishna Damani had a huge success in the ball bearing industry and was a very successful stock market player too.
He is so good that the most influential and successful stock market player of our time Rakesh Jhunjhunwala considered him his guru.
Rakesh Damani’s skills in the stock market help D-Mart where it is right now, his long term vision, and dedication to research (before starting D-Mart he went to the USA to check how wall mart operates there and how it maintains profitability despite giving so many discounts.) helped D-Mart reach heights very soon.
How has this company been so successful?
The first and major reason the company has been so successful is its meticulous planning.
Each store has a dedicated tailor-made strategy according to its profit-making capacity.
The planning always revolves around maintaining profitability, that is why in the initial years of the company the growth and expansion were quite slow.
D-Mart plans well that during 2001-2002 when real prices were at a slump they bought up a lot of land which they build new stores (as of now more than 85% of Dmart stores are on their own land) which helped them cut down on rent costs increasing their profit margins.
Even the locations of the stores of all D-Mart are consistent mostly all are located in, residential areas where majority of the population is either Middle or Lower middle class which are easily attracted to the discounts D-Mart offers them.
Discounts for the win
This brings us to their second strategy/Reason for success, Discounts.
The daily discount system of D-Mart attracts a lot of crowds to these stores.
While many retailers give discounts during a festivity or on certain days of the week, D-Mart provides daily discounts pulling larger crowds there.
These Daily discounts also help D-Mart in Marketing by word of mouth, in this scenario your customers become your sales team inviting more and more of their friends to your store, helping D-Mart cut the cost of marketing thus increasing their profit margins.
Supply Chain management
These daily volumes of consumers bring us to the third and final strategy, Supply Chain management.
Most of the industries in the sector take goods on a credit of 1-4 weeks, meaning that after you receive the goods you have one to four weeks to pay back the amount.
But if you pay the amount upfront of before this time period the supplier gives the retailers a discount and this is exactly what D-Mart does.
By doing this they are able to consistently give discounts to their consumers and still maintain profitability.
D-Mart’s consistent volumes of costumer help them to maintain a very good Inventory Turnover Ratio which basically means whatever comes in is sold very fast.
A good Inventory turnover ratio is very attractive to the supplier as he gets higher volume orders regularly, D-mart knows this and thus can bargain with the suppliers for additional discounts which again helps to maintain profitability.
These are the strategies by which D-Mart has continued to flourish good planning well thought discounts and supply chain management have been the bedrock of D-Marts strong foundations.
These are not the only 3 strategies that helped them grow there are many more like analysis of the market, high quality of goods and modernising with times but the above three are one of the most significant startergies they used to maintain profitability.
Its focus is on maintaining its business philosophy and never compromising on what has helped its constant success.
Credits:- Convey by FinovationZ and Nutshell India.
Featured Image Credit:- Zee Business