D-Mart on a steady growth path

D-Mart – owned and operated by Avenue Supermarkets is witnessing a steady growth while most of the offline retailers are complaining of negative impact of sluggish economy, online discounts and low consumer sentiment. The company reported a profit of Rs 211 crores in 2014/15, higher than Reliance Retail’s Rs159 crores and Future Retail’s Rs153 crores.

The company’s revenue in the same period was Rs 6,450 crores, 37.23 percent higher compared to the previous year, while Reliance Retail reported revenue growth of 21 percent in the same period. Whereas, Tata Group’s Trent Hypermarkets and Future Retail witnessed a decline in revenue.

Owned by investor Radhakishan Damani, the company opened its first store in the year 2000 and has since just focused on expanding its hypermarket retail chain focusing on food and grocery. Today, the company operates 91 D-Mart hyper market stores spread across 26 cities. According to Ravishankar W.S, founder of Probe Equity Research, one of the reasons behind D-Mart’s success is the best inventory turnover ratio in the country. Inventory turnover is the term used for the number of days a company takes to convert its inventory into sales. The quick inventory turnover allows the retailer to also negotiate better prices.

Also, another advantage it enjoys is that unlike its competitors, most of the D-Mart stores are located in properties owned by the firm. Also, having stores in the suburbs and in Tier II and Tier III cities helps them keep the operational costs low.

Keeping the advent of ecommerce in sight, the company, which has a web presence, is now exploring other channels such as integration of its stores, web and mobile, which will be launched by mid next year.