large FMCG companies operating in India have had a good run for decades. This was due to the fragmented nature of retailing allowing them tremendous clout over the supply chain. This supplier power allowed them to capture most of the value in the value chain leaving little on the table for the numerous small retailers.
Due to the target segment they focused on- they created all these “lifestyle” elements in their products allowing them to charge a premium and all this premium fell to their bottom line as they were able to retain it due to their clout over small retailers forming a bulk of their distribution network.
In this process, they ignored the consumption needs of a large part of india - when the monthly all india grocery bill per person per household in Urban India is Rs 1121 ( 2012 data ) - why would an FMCG company with a gross margin of 50% & tremendous supplier power even be interested in making anything for this group - The per capita spending is too low to attract them given they are so used to the juicy margins
To serve this segment one needs retailers like Walmart who wield significant clout over these companies. Walmart gross margin is 25%.
These kind of retailers ensure that this segment gets served with their buying power and ability to grab a part of the value from FMCG companies and passing some portion down the line to its end segment.
With about 109 million bill cuts per year, Dmart falls squarely into this category of retailers. Its Average bill value is Rs 1095 per bill with ~54% of it coming from food - mirroring the consumption pattern of the average urban indian with limited income.
A commonly accepted measure of retail performance is ATD or average trading density - this is the sales per sqft per month.
The ATDs in Indian Malls are Rs 1475 per sqft/pm (http://www.indiaretailing.com/uploads/Market_Research_pdf/50-53-Report-MOI.pdf)
The best performing mall in the Phoenix Mills stable is High Street Phoenix & Palladium in Mumbai with a trading density of Rs 2894 psfpm. The ATD of all malls in the Phoenix mills stable is about 1400 psf. Food, Beverages, Hypermarket & Departmental has an ATD of Rs 1612 psfpm across all Phoenix Malls.
Dmart has a trading density of Rs 2414 psfpm with an SSG of 21% its slated to cross Rs 2900 in FY18 - a remarkable performance in my opinion.
Some interesting articles ( though dated ) that help to compare trading densities :-