D-Mart Will Continue To Add Stores As Rivals Catch Up
The operator of D-Mart supermarket chain will continue to add stores and offer staples to shampoos at cheaper rates.
Avenue Supermarts Ltd., the operator of D-Mart supermarket chain, will continue to add stores and offer staples to shampoos at cheaper rates even as its pricing gap with online and offline peers has narrowed.
The company will continue to build its business on the “Everyday Low Prices” strategy it offers to customers, the billionaire Radhakishan Damani-controlled retailer said in an annual analyst meeting on Wednesday.
Competition from online players in the grocery space is on the rise. Offline peers such as Reliance Smart, Big Bazaar and EasyDay stores, too, cut prices of several food and consumer items. D-Mart, according to a Kotak Institutional Equities report, is now selling fewer products at lower prices than peers. In October last year, it offered the cheapest price for 21 of the 30 products under the brokerage’s coverage. The count fell to 12 in March.
Also, the company—that according to Edelweiss targets consumers with household monthly income of below Rs 50,000—added 21 stores in financial year ended March. Of these, it opened eight outlets in Maharashtra and four in Gujarat and Karnataka each.
New store openings were adversely impacted by delay in approvals and the general election, the company said, adding North India has been a relatively “new cluster” and hence, business has yet to pick up there. The retailer now has 176 stores across India.
The average store size of D-Mart in the last financial year stood at 46,000 square feet. Larger stores, the company said, are beneficial for more throughput in the long term.
Broker Prabhudas Liladher expects the company to add 28 stores in the ongoing fiscal and 30 in the following year.
E-Commerce In Nascent Stage
Avenue E-Commerce Ltd., which operates the online business D-Mart Ready, is still in infancy.
The e-commerce arm saw revenue more then triple to Rs 144 crore in 2018-19. Still, it contributes less than a percent to the parent’s overall revenue. D-Mart Ready’s operating loss remained nearly flat at Rs 40 crore last fiscal.
D-Mart Ready allows customers to place orders online, which can be collected from a pick-up point closest to the users’ location. The company sees an opportunity in scaling up this model in metros and already has 196 D-Mart Ready pick-up stores running. But till now operating costs in brick-and-mortar are lower compared to e-commerce, it said.