D Mart

DMart is a one-stop supermarket chain that aims to offer customers a wide range of
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 that the customers typically appreciate.
The core objective of DMart is to offer customers products at competitive value.
DMart was started by Mr. Radhakishan Damani 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 112 locations across Maharashtra, Gujarat, Andhra Pradesh,
Madhya Pradesh, Karnataka, Telangana, Chhattisgarh and Uttar Pradesh. DMart aims to be
the lowest priced retailer in the regions it operates, The business continues to grow with new
locations planned in more cities.
The supermarket chain of DMart stores is owned and operated by Avenue Supermarts
Limited.

General and specific environmental factors affecting performance of

D-mart:
An organization’s environment includes factors that it can readily affect as well as factors
that largely lay beyond its influence.

❖ General Environment:
PESTEL analysis is one important tool that executives can rely on to organize factors within
the general environment and to identify how these factors influence industries and the firms
within them. PESTEL reflects the names of the six segments of the general environment: (1)
political, (2) economic, (3) social, (4) technological, (5) environmental, and (6) legal.

(1)The ​political segment centers on the role of governments in shaping business. This
segment includes elements such as tax policies, changes in trade restrictions and tariffs, and
the stability of governments.

(2)The ​economic segment centers on the economic conditions within which organizations
operate. It includes elements such as interest rates, inflation rates, gross domestic product,
unemployment rates, levels of disposable income, and the general growth or decline of the
economy.

(3)​Social factors include trends in demographics such as population size, age, and ethnic mix,
as well as cultural trends such as attitudes toward obesity and consumer activism.

(4)The technological segment centers on improvements in products and services that are
provided by science. Relevant factors include, for example, changes in the rate of new
product development, increases in automation, and advancements in service industry
delivery.

(5)The ​environmental segment involves the physical conditions within which organizations
operate. It includes factors such as natural disasters, pollution levels, and weather patterns.

(6)The ​legal segment centers on how the courts influence business activity. Examples of
important legal factors include employment laws, health and safety regulations,
discrimination laws, and antitrust laws.

❖ Specific Environment:
Also known as task environment consists of factors that directly affect and are affected by the
organization’s operations. These factors include suppliers, customers, competitors, regulators
and so on.

● Competitors:
Policies of the organization are often influenced by the competitors.
Competitive marketplace companies are always trying to stay and go further ahead of their
competitors. In the current world economy, the competition and competitors in all respects
have increased tremendously.
The positive effect of this is that the customers always have options and the overall quality of
products goes high.

● Customers:
“Satisfaction of customer”- the primary goal of every organization. The customer is who pays
money for the organization’s product or services. They are the peoples who hand them the
profit that the companies are targeting.

● Suppliers:
Suppliers are the providers of production or service materials. Dealing with suppliers is an
important task of management.
A good relationship between the organization and the suppliers is important for an
organization to keep a steady following of quality input materials.

● Regulators:
Regulators are units in the task environment that have the authority to control, regulate or
influence an organization’s policies and practices.
Government agencies are the main player in the environment and interest groups are created
by its members to attempt to influence organizations as well as the government. Trade unions
and the chamber of commerce are common examples of an interest group.

● Strategic Partners:
They are the organization and individuals with whom the organization is to an agreement or
understanding for the benefit of the organization. These strategic partners in some way
influence the organization’s activities in various ways.

Strengths:
Strengths are defined as what each business does best in its gamut of operations which
can give it an upper hand over its competitors.
The following are the strengths of DMart:
● 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 returns through a value
is driven pricing strategy.
● D Mart started off on a very low key note and slowly took its time to move up the
ladder which is called slow scaling.This gave the company a better control and deeper
understanding of its supply chain and also helped them manage the bottom line better.
● D Mart has a very good employee policy in place and is very transparent in its
employee relations. They also have a good relationship with vendors and suppliers
and the stakeholders are happy.
 ● 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 cannot
match and this helped them penetrate the market.
● D-mart believe in setting their own trends. They captured the market through a clear
price based differentiation and priced their goods at significantly lower prices than
competitors.

Weaknesses:
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 Mart has focused more on the Western States and has a very low presence in the
South. This has restricted them from gaining market prominence.
● Slow growth : D Mart has established almost 16 years ago much before the retail
boom set a fire in India. However, it has not been able to capture the market even as
much as many of the later entrants primarily because of its long-term focus.
● Sustainability of low pricing: The company has a zero credit policy and thus vendors
and suppliers 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 come here essentially look at the low prices of products
on offer. So thus the sustainability of this differentiator is questionable.

Core competencies of D-mart:

Since the launch of its first store in 2000, the retail chain has just focused on
expanding in food and grocery.
The company’s focus is on competing in the “basics needs space and focus on
efficiencies similar to what the largest retailers globally have done," said Nohurr,CEO of
D-mart.
It's competitors have multiple formats in categories like digital, home, apparel and
footwear besides food and groceries.but D-mart is a pure food and grocery retailer.

Competitive advantages:

​Low cost items, higher inventory turnover ratio and no recurring fixed expenses as
rent, contributes heavily towards reduction in net cost.
Approach of keeping a keen eye on long term profits instead of short-cuts is
consistently replicated in running of operations in D-mart.
 Its choice of regions and premium locations provides it a deep penetration into the
retail market of small cities and towns. A resource not present with its rivals.
It is prohibitively high cost for rivals to compete in the same market with D-mart
with location advantage.
D-mart has superior access to inputs. Rivals cannot replicate similar sourcing
model.It has highly loyal customer base. Sales strategy is unique and not adopted by its
rivals. Competitors cannot provide enough incentive to customers to switch.
Early entry into smaller towns provided it with mix of tried and trained human resources and
other local advantages.

Other than these, D-mart has following competitive advantages:

● Sales mix is pre-dominantly food stuff and groceries.
● Strong logistic network.
● Lesser indulgence in creating brands, instead sells low cost daily basis food stuffs and
groceries at 6-7 % discount to other stores.
● Higher inventory turnover ratio.
● Lower payment days for suppliers, hence D-mart is able to procure at cheaper rates.
● All stores are profit making.
● It has never closed or moved stores.

Strategies adopted by D-mart :

Operation strategy : To accelerate growth,D-Mart is willing to forgo owning its stores. The
company has followed an ownership or long-lease model, which has helped cut costs and
boosted margins.
The firm is best known for its “everyday low cost, everyday low price" strategy, allowing it
to extend near-permanent discounts to customers on a daily basis. This helps it to churn
inventory quickly and aids profitability.
However, challenges in acquiring land at suitable locations, getting necessary permissions
and requisite approvals has prompted the shift in strategy.

Marketing strategy : ​D-Mart is also looking to ramp up its e-commerce presence.

D-Mart has also recently stepped up promotional activity, and the company is seeing more
traction at its “click and collect" kiosks.
Apart from click and collect, the company is running home delivery pilots in “D-Mart dark
areas" in Mumbai—neighbourhoods in the city where D-Marts don’t exist. The company
charges for its home deliveries and is mainly focused on groceries.

Promotional strategy : DMart passes on the benefits to the customers, in the process
communicating a message of care and protection. “Even when you are not looking, not
careful, you’ll still save money with us” seems to be the unstated subtext in its
communication.

Personnel strategy : DMart has built a cadre of simple, hardworking store people who
ensure fully stocked shelves, clean price communication and efficient check-outs and not
much beyond in customer service.

Financial strategy : As mentioned as one of the advantages above-Low cost items, higher
inventory turnover ratio and no recurring fixed expenses as rent, contributes heavily towards
reduction in net cost which ultimately helps in increasing profit.