Challenges faced by DMart while

implementing Every Day Low

Pricing, Efficient Supply chain and
property ownership Strategies
Name Roll No.

Anoop Jose EPGP-15B-009

Anuj Kuriachan EPGP-15A-006 GROUP-5
Lohit Vijapur EPGP-15B-041
Mokshananda Rao Yakkala EPGP-15B-051
Monika Singh EPGP-15B-052
Nihalraj Javali EPGP-15B-055
Ritesh Kumar EPGP-15B-076
Sreyas R EPGP-15A-082
Sunil S EPGP-15B-096
Tushar Jyoti Roy Choudhury EPGP-15A-094
 R E TA I L I N D U S T R Y I N I N D I A

• Indian retail market is expected to reach $1.1 Tn by 2026 and $2 Tn by • Indian's digital payment landscape is thriving​
2032 growing at 25% CAGR
• Retail industry accounts for over 10% of India's GDP​
• India currently has the 4th Largest retail market in the world
• Employes 8% of our total workforce​
• 10% growth rate of retail sector over 2022-32
• Total organized retailers are in urban area and their share is 12%​
• By 2030, it is expected to generate 25M new jobs and will be the single
largest new job creator in the country • Indian retail sector in 2023 has consolidated remarkably well​
• 2023 was a pivotal year for growth of Indian's Micro, Small & Medium
Enterprises sector, growing consumer power, entry of international
brands
C O M P E T I T I O N A N A LY S I S & K E Y
BRANDS
The Indian retail market is a battleground for dominance, characterized by
a unique blend of traditional and modern players.

Key Players: Factors Influencing Competition​

• Traditional Retailers • Rising Disposable Income

• Kirana Stores • Technological Advancement​

• Independent Grocers • Government Regulations​

• Weekly Markets
Future Outlook​
Modern Retails
• Omnichannel Strategy​
• Super Markets & Hyper
Markets • Focus on Rural Markets​

• Department Stores • Technological Integration​

• Specialty Stores Competition Dynamics

• E-commerce Platforms • Traditional vs Modern, Within

Modern Retail
C H A L L E N G E S FA C E D B Y R E TA I L
SECTOR IN INDIA
Poor Supply Chain Regulatory Customer Compliance &
Competition Ecommerce
Infrastructure Management Environment Expectations Sustainability

Increasingly, Adhering to
Due to the rapid
Retailers operating businesses must environmental
expansion of e-
Poor infrastructure in India may face adapt constantly sustainability
To stay ahead of commerce,
creates logistical difficulties due to and invest practices
Ineffective supply the competition, traditional retail
difficulties for last- the intricate and in technology to and regulatory
chain management retailers must models have been
mile delivery, constantly evolving meet the needs of compliance
raises expenses and continuously disrupted, posing
distribution, and regulations, their customers in standards is
lengthens lead innovate and set problems with
supply chain including labour terms of product becoming more
times, which hurts themselves apart inventory
management, laws, taxation variety, and more crucial,
profitability. from both local and management, omni
particularly in rural policies, and quality, convenienc but it can
foreign brands. channel
areas. foreign investment e, and demand many
integration, and
guidelines. personalized experi resources
pricing pressure.
ences. from retailers
 H I STO RY O F
DMART

Founded in 2002 Operates in 365 stores Dmart Ready Every Low Cost & High Store Sales
Price Growth
Dmart achieved high
Dmart Ready: an Dmart, hailed as the king of Same-Store Sales
value retail, fortified its
Dmart (Avenue online store where position in the market by
Growth (SSSG) of over
Supermarts Limited) Dmart currently customers can Every Day Low Cost (EDLC) 20%, leading to robust
was founded by operates close to 365 purchase groceries and and Every Day Low Price EBITDA margins of
Radhakishan Damani in stores in India household goods, (EDLP) strategy, with 8.4%, significantly
meticulous focus on
2002. which was launched in minimizing procurement and surpassing industry
December 2016. operating costs. peers.
 MODEL
Key Key Activities Value Customer Customer
Partners Propositions Relationships Segments
• Selling products in Store
• Product • Selling products online • Every Day • Assistance • Cost conscious
Distributo Low Cost & during product customers
rs Every Day selection and belonging to
• (large and Low Price billing lower-middle,
small) Key Resources • Variety Channels middle, and
• Product • Quality aspiring upper-
Manufactu middle class
rers • Products: Products sourced at low cost in order to sell at • Physical Stores
low price. • Online Stores
• Credit: Low cost credit from its lenders to build retail
stores
• Employees: Low cost and trained workforce

Cost Structure Revenue Streams

• Operational Expense (OPEX) • Store based retail

o Purchase of Stock in trade o Food Products (~54% of sales)
o Finance Cost (interest paid on borrowings) o Non-Food FMCG (~20% of sales)
o Employee Cost o General Merchandise & Apparel (~26% of sales)
• Capital Expense (CAPEX) • Online retail
o New Retail stores to expand business o Pick up point based delivery (Free delivery)
o Home Delivery (Delivery is chargeable)
 DMART' S
S T R AT E G I E S
Product Strategies Supplier Strategies Operations Strategy Channel Management

Low Cost Pay Quicker Close category shelves Cluster Approach

Daily Needs Develop relationships Warehouse like Structure Stores are closer to
Sell them less than MRP Negotiate directly from distribution centres
No frills
No Private Labels in the major Manufacturers Invested in the distribution
categories Hard-Working Employees
Source from China and logistics business
Limited assortment (less Self-Service
variety) No hassle in the checkout
Quicker inventory turnover is Global standard store equipment
the motto of all products
Sell products 6-12% less tham
MRP
D M A R T ' S S T R AT E G Y I M P L E M E N TA
TION & CHALLENGES
MCKINSEY’S 7S FRAMEWORK

Strategy Structure Systems Skills Staff Style Shared Values

DMart's core DMart have a Efficient inventory

Dmart actively Customer
strategy revolves centralized management DMart has
focuses on A frugal and data- satisfaction, value
around everyday decision-making systems, logistics gathered skilled
employee training driven culture for money, and
low prices (EDLP), structure for networks, and employees in
and development to permeates DMart, operational
focusing on value procurement and possibly procurement,
ensure efficient emphasizing cost- excellence are core
for customers and overall strategy, technology for in- negotiation, supply
store operations consciousness and values at DMart.
efficient operations with decentralized store operations are chain management,
and customer efficiency.
to maintain low execution at crucial for DMart's and cost control.
service
margins individual stores. EDLP strategy.
PESTEL FRAMEWORK
Analyzing DMart's strategy using the PESTEL framework can provide insights into various external factors that may impact the
company's operations:

Government policies and regulations related to retail, taxation, and foreign investment can affect their operation
Political Factors:
Political stability and geopolitical tensions can influence consumer confidence and purchasing behavior.

Economic indicators such as GDP growth, inflation rates, and unemployment levels can impact consumer spending patterns,
Economic Factors: affecting DMart's sales and profitability.

Demographic trends such as population growth, urbanization, and income distribution can shape demand for DMart's products and
Social Factors: influence store locations and marketing strategies.

Advancements in technology, such as e-commerce platforms, digital payment systems, and data analytics, along with
Technological Factors: adoption of automation and artificial intelligence in inventory management and customer service can enhance operational
efficiency and competitive advantage for DMart.

Growing awareness of environmental issues and sustainability practices may influence consumer choices, leading DMart to adopt
Environmental Factors: eco-friendly initiatives in packaging, sourcing, and energy efficiency

Compliance with labor laws, health and safety regulations, and intellectual property rights protection is essential for DMart's
Legal Factors: operations. Legal disputes, regulatory changes, or compliance issues can pose risks to DMart's reputation and financial
performance.
L O W P R I C I N G & O P E R AT I N G
E X P E N D I T U R E S T R AT E G Y
Strategy Challenges Solutions
Delivering consistently low prices to customers Maintaining Profitability: low prices can DMart prioritized operational efficiency to lower
in a sustainable manner is a challenging feat, have a negative impact on profitability costs through streamlined supply chain
but DMart has mastered this balance by
management, inventory processes, and store
maintaining a highly profitable operation. The Supplier Relations: Securing consistently layouts. Leveraging their scale, they negotiated
key to DMart's success in keeping both its low prices from suppliers while upholding favorable volume-based pricing with suppliers,
customers and investors satisfied lies in its cost quality standards can be difficult.
structure. sustaining low prices while ensuring reasonable
DMart's operating expenditure, which is profits.
Competitive Pressure: Fierce competition in
consistently below 7%, in contrast to its peers retail sector could force D-mart to further
who typically have operating expenses Establishing enduring partnerships with suppliers
push the prices down impacting their played a vital role for DMart, emphasizing
exceeding 10%. This difference means that profitability
DMart can offer its products to customers at transparency, fairness, and mutual gains to
prices that are 3% lower while still achieving cultivate strong relationships. Their strategy of
Technology Integration: With the expansion early payout played a vital role in maintaining
similar profit margins.
of its online presence, D-Mart must integrate long-term relations.
technology seamlessly into its low-price
strategy to deliver a top-notch online shopping DMart made significant investments in advanced
experience, which is essential for success. technology systems for managing inventory,
tracking sales, and handling customer
relationships, facilitating streamlined processes
and informed decision-making.
P R O B L E M : M A I N TA I N I N G P R O F I TA B I L I T Y W I T H
LOW PRICING
DMart's strategy of consistently offering low prices to customers can lead to challenges in maintaining profitability. While it attracts customers, it
can also lead to lower profit margins if not managed carefully.

Implementation Process
1. Operational Efficiency: (Process Strategy) DMart has already implemented this solution
effectively. They continuously strive to streamline their operations through efficient supply
chain management, inventory control, and well-designed store layouts. This minimizes
Root Cause: The root cause lies in operating expenses and helps maintain profitability even with low prices.
DMart's planned strategy of Everyday
Low Cost (EDLC). This strategy 2. Supplier Negotiation and Volume Discounts: (Planned Strategy) DMart leverages its bulk
prioritizes minimizing procurement and purchasing power to negotiate favorable deals with suppliers. This allows them to secure
operating expenditures to offer lower product costs, which translates to lower selling prices while ensuring healthy profit
consistently low prices. However, there's margins.
a risk of sacrificing profit margins if
costs cannot be sufficiently reduced. 3. Strategic Product Selection: (Planned Strategy) DMart can strategically select products
with higher profit margins to complement their low-priced offerings. This ensures an overall
healthy profit mix without compromising on their value proposition.
S U P P LY C H A I N M A N A G E M E N T
S T R AT E G Y

Strategy Challenges Solutions

One key strategy D-mart has employed is Supplier Reliability: Depending on Working closely with suppliers and
maintaining a lean inventory model. This means external suppliers for just-in-time delivery implementing vendor-managed inventory
they keep their inventory levels low and tightly can be risky (VMI) systems
controlled, reducing the risk of overstocking or
wastage. Demand Forecasting Accuracy: predicting Advanced Analytics and Forecasting:
Just-in-time (JIT) inventory approach: they analyzing historical sales data, market trends,
demand can be challenging due to factors
receive goods from suppliers as close as possible to and other relevant factors, they could better
such as seasonal variations, changing
the time they are needed for sale. anticipate customer demand and adjust
Monitoring consumer demand: they ensure consumer preferences, and unexpected inventory levels accordingly
enough inventory to meet customer needs without events
tying up excess capital in inventory Inventory Optimization: implementing just-
DMart eliminates the middleman from their chain, Stockouts and Lost Sales: Maintaining in-time (JIT) inventory practices, setting
which helps in passing their commissions as lean inventory levels increases the risk of optimal reorder points, and utilizing inventory
discounts to their consumers. They not only stockouts turnover metrics to identify slow-moving items
focused on meeting their customer’s needs but also
focused on offering some benefits. Limited Product Variety: To minimize Diversifying Suppliers: DMart can rely on
This approach helps them minimize costs and inventory, DMart might have a limited multiple suppliers for critical items. This
maximize profitability while also ensuring that selection of products compared to reduces dependence on any single source and
customers get fresh products and a wide range of competitors with larger stockpiles. This mitigates the risk of stockouts due to supplier
choices. issues.
could restrict customer choice.
P R O B L E M : L I M I T E D P R O D U C T VA R I E T Y D U E T O L E A N
INVENTORY MANAGEMENT

DMart's focus on maintaining a lean Implementation Process

inventory model to minimize costs can
lead to a limited selection of products 1. Diversifying Suppliers: (Process Strategy) DMart can rely on multiple suppliers for critical items.
compared to competitors with larger This reduces dependence on any single source and mitigates the risk of stockouts due to supplier
stockpiles. This can restrict customer issues. By working with a broader supplier base, DMart can potentially offer a wider product selection
choice and potentially reduce sales. without significantly impacting their lean inventory approach.
2. Advanced Analytics and Demand Forecasting: (Planned Strategy) DMart can leverage data
analytics to improve their demand forecasting accuracy. By analyzing historical sales data, market
trends, and seasonal variations, they can anticipate customer needs more effectively. This allows them
Root Cause: The core of this to stock a wider range of products strategically while maintaining optimal inventory levels.
problem lies in DMart's planned 3. Optimizing Inventory Management: (Process Strategy) DMart can refine their inventory
strategy of Everyday Low Cost management practices to ensure they have enough stock of popular items to meet customer demand.
(EDLC). This strategy emphasizes This might involve implementing techniques like just-in-time (JIT) inventory for less popular items
minimizing procurement and and safety stock for high-demand products. Additionally, utilizing inventory turnover metrics helps
operating expenses, which identify slow-moving items that can be replaced with more popular choices, optimizing shelf space
translates to keeping inventory and product variety.
levels low and tightly controlled.
S T R AT E G I C L O C AT I O N S & S T O R E
F O O T P R I N T S T R AT E G Y
Strategy Challenges Solutions
Dmart’s strategic decision to own properties High Initial Investment: While it avoids future Strategic Acquisitions: Focus on acquiring
instead of renting has been a game-changer. By rent spikes, buying property requires a properties with long-term potential for growth,
strategically locating their stores in non-prime significant upfront cost. This can limit DMart's even in non-prime areas. Look for areas with
areas, they have effectively kept their initial ability to expand rapidly, especially in new upcoming infrastructure projects or changing
investment low and avoided the unpredictability of markets. demographics that could become prime
rental spikes in the future Location Limitations: Focusing on non-prime locations in the future.
DMart’s targeting customers were middle class locations might restrict customer foot traffic Hybrid Model: Consider a mixed strategy of
groups and lower-class groups, so they stayed away compared to high-street areas. This could owning properties in established locations and
from shopping malls and fancy. impact sales, especially for products that rely on renting in strategic upcoming areas. This allows
impulse purchases. for expansion without a massive upfront
Property Management: Owning properties investment.
adds the burden of property maintenance, taxes, Forming Partnerships: Partner with
and potential vacancies. DMart needs a developers for co-ownership or revenue-sharing
dedicated team to manage this, increasing models in new locations. This reduces DMart's
operational costs. initial investment and shares the risk.
Market Fluctuations: Real estate prices can Optimizing Owned Properties: Continuously
fluctuate. A downturn could mean DMart is evaluate owned properties. Consider
stuck with overvalued properties. redevelopment or revenue generation through
additional floors or renting out unused spaces.
P R O B L E M : C H A L L E N G E S FA C E D D U E T O P R O P E RT Y
OWNERSHIP
While DMart's strategy of owning properties offers benefits like avoiding rental spikes and controlling store locations, it also comes with potential
drawbacks. These include:

High Initial Investment: Purchasing properties requires a significant upfront cost, which can limit DMart's ability to expand rapidly, especially in
new markets.

Implementation Process
1. Hybrid Model: (Process Strategy) DMart can adopt a mixed strategy. They can continue
owning properties in established locations while renting in strategic upcoming areas. This
allows for expansion without a massive upfront investment and provides flexibility to test
new markets before committing to ownership.
Root Cause: This problem stems from
2. Strategic Acquisitions: (Process Strategy) DMart can focus on acquiring properties with
DMart's planned strategy of property
long-term potential for growth, even in non-prime areas. Looking for areas with upcoming
ownership. While it offers long-term cost
infrastructure projects or changing demographics can lead to future prime locations,
benefits, the initial investment can be a increasing property value and potentially generating rental income.
hurdle.
3. Forming Partnerships: (Process Strategy) DMart can partner with developers for co-
ownership or revenue-sharing models in new locations. This reduces DMart's initial
investment and shares the risk associated with property ownership in unestablished markets.