I have been a late entrant into both DMart store and stock. In fact our family used to shop at Food Bazaar and never had the intention of moving to DMart for groceries. But then it is a very common adage at least at the place I live (Navi Mumbai/Panvel) that where DMart goes Food/Big Bazaar closes down. The merchandise at the former Big Bazaar is nothing compared that at DMart. We get 99% of all that we want from DMart which was not the case at FB. We do not ant to make multiple visits for groceries.
We go to DMart once in 1.5 months and spend about Rs. 8-10K. Initially we thought we will never go to DMart on weekends because of the horde of shoppers. Then we said we will never in the evenings on weekdays. These days there is no good time to go to DMart.
In the meantime we went to Future Bazaar for the first time and they almost convinced me to take a Future Card by paying 10000 or 5000 but I did not relent. The second time I acquiesced and actually got a card thinking I will save 20% over a period of one year. I get to shop for Rs. 500 every month. We have two cards and we spend about Rs. 1000.
After about 6 months we have concluded it was a waste of time. Generally the merchandise is expensive at Big Bazaar. Also I see that their billing is quite slow despite the queue being not long. The variety is also limited at Big Bazaar. Their loyalty systems are so messed up. One evening we spent 30 minutes to buy stuff worth rupees 1000 because our card numbers simply would not be accepted. These are hassles most people do not want to get into. Also from the look of it I felt BB’s cost structure is not very efficient. Lots of employees and many of them getting enough free time to socialise. As they say an airlines make money only when it is flying. Similarly retailers make money only when they are billing.
I do not see the single minded focus in the running of BB. Another thing to note is the employee turnover is much less in DMart compared to other retailers. Right from the top management to regional managers DMart employees have stock options which motivates them to perform at a higher productivity.
As for dealing with suppliers, DMart is right at the top. My friend who progressed from being a department manager of a store to a regional manager told me that clearing supplier dues within 48 hours is a very important KPI for them.
So all these things (employees, customers, good merchandise and supplier goodwill) add up to the efficiency of the model. I never apply for IPO and naturally did not apply for DMart IPO, but after considering all these factors I took some positions (about 5% of my portfolio) in DMart after it went up 60% from the IPO price. If it goes down significantly I will add another 5%. This was the model I followed for all the good companies in my portfolio and it has helped me protect my capital and give me some returns over the years.