Reliance purchase are more then that of D MArt then why Reliance is not getting the lowest cost of product???
May be, but if dmart can save big on distribution then overall cost will reduce for dmart.
@VALUE2017 DMART does two things very differently.
-
It owns all its stores and does not have to pay rent
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It pays cash to suppliers and asks for massive discount.
Reliance as a group doesnât have a great track record of paying on time.
The biggest"operating" moat of dmart comes from this simple strategy understanding of real estate well and taking it out of opex and move it to capex.
This on a world where the reverse is happening and everything is moving to opex( saas, cloud, EMIs etc.) From capex ( buying license software, buy server and pay for goods)
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Hi All,
Hoping someone can help me understand my (maybe stupid) doubt.
Dmart in it online home delivery app charges a delivery fee (rs 49 to 79 I think).
Why doesnât it just charge a little higher for its products to recover this amount and keep a min order value.
Have seen so many people who order from jiomart and not from dmart because of their delivery charge. If they just include it in the bill no one would mind or care if itâs a bit higher than an offline store?
What am I missing here? Is it some moral issue 
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I so much agree with thisâŚ
There is a story that goesâŚ
Someone asked McDonaldâs about how their business of making burger is goingâŚ
and the owner seems to have replied⌠We are first primarily in the buisness of real estate. Where we open our store is very much important than the burgers we makeâŚ
So Something similar with DmartâŚ
It is not just about opening a retail shop and giving goods at lowesr pricesâŚ
it is about where you openâŚ
how well you understand the demographicsâŚ
how well you understand the local tastes / pallateâŚ
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This is the learning Amazon had to go through as well. There is enough literature on this on the Internet and books on the internet.
DMART will come around too or maybe find their own contra way.
Customers are ok to pay higher for the goods but donât want to pay for shipping.
Just stating a personal bias: the moment I bought prime I stopped visiting other websites.
On an anecdotal basis I see this in many of my friends too
That said, Dmart needs to invest more on technology.
One of the questions in the analyst calls for banks and retail companies should be
- who is your CTO
- what is your tech spend as a percent of revenue
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Amazon does not make much money on retail, most of amazon cash comes from other area, AWS is a big contributor , if Dmart start following such practice of delivering for free then its margin will shrink , if it starts charging more then there will be conflict of pricing i.e store vs delivery , Damani has been expert in business he runs, we should continue to trust him what works best for company.
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Dmart shared the revenue estimation and covid updatesâŚ
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The idea is not to deliver for free. Even Amazon does not not do that. You have to subscribe to prime to do that.
Prime has more tha 100 million members globally and is independently valued at more than 100 billion(there is an aswath Damodaran valuation on that)
Though dmart mY have to go back to the company Amazon originally got yhis idea from: Costco.
Dmart is closest to Costco and you can only buy at Costco of you have a membership.
WhAt path Dmart takes is uncertain but they need to mak a choice soon
@Unknowninvestor : Prime service is to have the customer enter into Amazon ecosystem to make them use Alexa, Amazon music, Audible, book membership, streaming, amazon devices, amazon drive and lot other things, amazon has much more ways to recover the cost of delivery and prime cost can not be considered a sole major contributor for that. Sony makes losses in play stations to cover from selling games and charging from subscriptions if Sonyâs core business was to sell play station then Sony would not survive or margin would be negligible.
Costco and Walmart are good example to compare but both make more money by store visit than online shopping, via Costco you still have to pay for daily usage grocery online shopping.
It is not completely true that DMart owns all the real estate of their stores. They have conveyed in their analyst call that theyâre very much open for leased spaces. I think DMart already runs on leased spaces. I donât have exact numbers of the proportion of owning and leased spaces, but at the moment owned space comprises the majority. This composition may change in the future.
In my understanding, DMart is not so keen on owning real estate due to the potential appreciation in value or save on rent. Their focus is more on strategic locations for accessibility. Even if the real estate is dirt cheap, I donât think DMart will invest in locations far away from customers. I think they like to be within 2 kms from the customers. In this light, I think their openness towards leasing makes sense that one cannot always own real estate when the focus is more on prime locations.
Regarding DMart Ready charging for delivery, I think it is also part of their clear strategy: Be transparent about the pricing and customers will surely realize the value. The general idea that customers dislike having to pay for shipping needs scrutiny. Customers know that they have to spend on fuel, time and effort if they purchase at the DMart store. I think DMart Ready is meant to provide just a convenient alternative for customers to buy from DMart.
In that sense, when DMart sets the shipping charge, as a customer I will compare that with what it costs for me to visit DMart store (fuel, travel time, and effort and now the COVID risk among the crowds). It is clearly a value proposition. If the pricing of products on DMart Ready is not similar to the one at the store (that is prices increased to cover shipping charge), I will have less trust on DMart Ready and DMart brand altogether. As a value conscious person (DMartâs core customer), I would eventually find out about the difference. So what DMart does makes sense to me. DMart is seeing DMart Ready as just another way for the âexistingâ DMart customers (mostly) rather than signing new customers like other egrocers.
There is another interesting thing DMart Ready does. I donât know about other cities. But in my city, DMart Ready delivery is not available to all the pincodes. I have DMart store within 2 kms. For my pincode, DMart Ready delivery is not available. But delivery is available to the next pincode which is about 3-4 kms from the DMart store. I think that is another nuance with DMart Ready that needs consideration. In short, DMart Ready has different goals than other egrocers.
It would be great to know if any of you observe such aspects in and around your cities to confirm or disprove these.
Disclosure: Invested.
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A brief analysis on current situation & Q4 details published by Dmart
I had similar views posted but seems the community didnât get the gist of the analysis & flagged off for removal
Kindly read & understand before flagging off anything⌠it may not be useful to individual but certainly helps the retail community in taking informed wise investment decisionsâŚ
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I think two very important points you make here - 1. Goals of Dmart Ready is diferent from other e-grocers. This aspect, which I earlier used to consider management being adamant is actually them knowing exactly what they are doing and can do best as per their DNA.
2. Dmart Ready seems more to serve their existing customer base and those who love the Dmart or will do so eventually. Its more of a gradual pull by sticking to their DNA rather than an unsustainable magnetic pull that some other grocers (who lack any other stronger strategy in their DNA) tryâŚ
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In the previous, AGM Mr Noronha clearly mentions their preference to own stores.
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Neville Noronha: How the assortment changes I cannot comment on it. But even if the assortment changes, say for example it goes from 28% goes to 40%. Even if it goes to that level if you ask me honestly, I would still like to keep my gross margin at a company level at
15% to 16%. I will make my pricing more and more aggressive and make the model
more and more stronger. That is the moat. That is how you make businesses which
are eternal and nobody can touch you.
â page 34 of 2020 analyst trasncript
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D Martâs forte is its ability to cater to the value and price conscious customers who used to depend on traditional kiranaas. Customers who shop at D Mart like their transparent pricing and quality. Busy and time conscious customers prefer E-Grocers and price may not be the only factor for them. Both markets are huge and leave lot of potential to nimble companies to grow.
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Dmarts ultimate strategy for Indian markets is discounts. DMart offers its products at a 6-7 % lower price than other retail chains and at times 10% off MRP. This further attracts the low and middle-classâs to their stores.
D Martâs forte is its ability to cater to the value and price conscious customers who used to depend on traditional kiranaas. Customers who shop at D Mart like their transparent pricing and quality. Busy and time conscious customers prefer E-Grocers and price may not be the only factor for them. Both markets are huge and leave lot of potential to nimble companies to grow.
I agree considering the current situation. It takes hours among the crowds to shop at DMart. So I see people prefer chains like Ratnadeep or More Supermart for smaller purchases as theyâre much closer and convenient (that is, DMartâs value conscious customers). However, time and convenience are only temporary differentiators in this case. Tweaks to the processes and application of technology will minimize these differentiators.
DMart is already working to address these differentiators. I see Home Delivery, Pickup Points, attempts to increase the store size, cluster approach of adding more stores around the same area, and keeping more counters active are all meant to reduce these difficulties. So I believe the current differentiators of other retail chains may well be gone as time progresses. On the other hand, while DMart is working on this I wonder what the competition is doing to address DMartâs cost advantage over them.
There are also other differentiators that DMart may never focus on. One differentiator that may stay for long is the nearness (walk-able distance) and the need to purchase odd items. I donât think DMart is interested in this niche. I see local kiranas thriving in this regard like 7-elevens in the US.
There are also retail chains that thrive in the niches that DMart does not focus on. Polimeras is one such example which focuses mainly on vegetables and fruits (and milk products). I donât know about their profitability but they seem successful in attracting customers and giving tough competition to the road side vendors on quality, assortment, and price. I think selling short shelf-life products needs very different skills than being efficient in selling longer shelf-life groceries. Such differentiators also may stay for long.
Disclosure: Invested and I worry that I am very much biased
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There are also retail chains that thrive in the niches that DMart does not focus on. Polimeras is one such example which focuses mainly on vegetables and fruits (and milk products). I donât know about their profitability but they seem successful in attracting customers and giving tough competition to the road side vendors on quality, assortment, and price. I think selling short shelf-life products needs very different skills than being efficient in selling longer shelf-life groceries. Such differentiators also may stay for long.
You are quite right about this. In fact, Neville Noronha had addressed this in one of the analyst meets. One thing I like about Dmart and their management is - they are very clear on what they want to do and what they really donât. But at the same time they are ready to adapt with the changing market conditions.
Fresh has never been our focus area, primarily because the size of our stores isvery small, throughput is very high and there is a lot of crowd. Fresh needs a particular way of handling, management, flotation and refilling. It just does not fit into our model. We would have loved to do fresh but it is very tough. Especially when at every nook and corner,vendors sell fresh produce (vegetables and fruits);therefore we do not see much value. You have also been shoppers of fresh. If you build a very good rapport with the vendor on the street, and you are constantly buying from him/her, you will get far better quality and far cheaper price than the supermarket. At least that is what our research tells us. But again,I am saying all these things are as of now and markets change, environment changes, things change.What we can say is that we are constantly watching. If we see an opportunity, we will do something. Another example is, if you look at Europe, most of Europe is convenience, small store format and they all have fresh. But like I said, there is no black and white answer, there is always context, there is always grey. So, depending on what opportunity arises, we will work on it.
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Found this interesting article on Costco.
Starking similarities between both is the philosophy of how can we lower the cost and pass on the benefits to customers.
Just thinking out loud can DMART do a COSTCO in the future i.e membership-based model and similar cult maybe?
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