Avenue Supermart: a compounding machine?

(Dinesh Sairam) #1041

(ravish) #1042

Dmart should also open large store formats which have large parking and i think it wont be impossible for them do some few hundred crores of sales per year from those stores. Also i dont know how their franchise models works? If it works on commission or royalty basis then again the profit would increase on its expansion without any balance sheet load. I read today only how much revenue Ola and Uber are having yearly and it was very disappointing for me to see only 1500 crore and 500 crore is clocked by them and the money they are spending or say loosing is huge. Their model is perfect for Metro cities but wont be profitable in other cities. In case of Dmart even a District and Taluka level can give revenue more than lakh crore despite all the current sellers doing business. I have seen how a taluka place is changing in terms of packaged foods, just start from Flour,spices, surf, tea and many day to day items. Market is very huge and is expanding more than ever but how will they tap this Taluka size market will be a key to their growth. I hear from one of my friends Dmart is looking for place in talukas. Damani is outstanding is very though full of what he is doing and one should also notice than he is a outstanding Investor which sets him apart from other businessman as he knows better about a profitable business sense. My take on current situation is very basic it is not giving any margin of safety and the results it has given also creates short term doubt. It is better to watch is and jump with all guns blazing when a significant correction in price.
Discl: No holding.

(Ranga Kiran) #1043

(Abhinav Mehrotra) #1044

A very balanced article articulating all the reasons why and why not online grocery shopping works/will work. Great to see that India has one of the ingredients needed to make this work.

(Abhishek Jain) #1045

Beautiful article indeed.
But demographics are different- US and India; while the population density in Indian cities is much higher than the US, at the same time logistics and supply chain is equally horrible.
Indian online grocery market is still in a very nascent stage and with FDI compliance rules, firms thinking about profitability, it will be much more difficult to sustain the online grocery model.
In my opinion, the main driving force to buy grocery online is the discounts given by players.Once it dries down, it will be difficult for these players to sustain.Indians prefer buying grocery after touch and feel.
Recently,paytm mall whose major source of revenue was grocery section, suffered a decline of almost 80% in sales, the moment they stopped cashback/discounts. Given the number of players available as alternatives(big basket,amazon now,flipkart,grofers), it did not even take customer a month to switch loyalities- such is the bad market; till the time you are providing discount and freebies I am with you :slightly_smiling_face: