The Growth of Dmart
Dmart is one of the largest hypermarket chains in India. As of 2022, D Mart has their presence in over 238 cities in India and owns more than 1000 retail stores. Since its inception in 2002 by Radhakishan Damani, it never failed to thrive at any point in time.
In this article Let us delve deeply to understand the story of Dmart. We will also figure out what makes D Mart unique and what earns Dmart a loyal returning customer base and also what as an aspiring business person one can learn from this enterprise.
Topics Covered in This Article
I have covered the following topics in this Article
- The Problem solved by this business.
- The 5 strategies followed by D Mart
- What one can learn from this successful Business Model.
What is the problem solved by DMart?
- When Radhakishan Damani started D Mart, there used to be very few Hypermarkets present in the country where people could directly go and pick up products by themselves. The most popular method of operation followed by the then daily needs shops was not to allow the customers to enter inside the shop. The shopkeeper would collect and hand over the things the customer asks for. D mart solved this problem by setting up Hypermarkets where one can enter and pick up the products as they want.
- Moreover, the 45-year-old Radhakishan Damani, who was a prominent investor at that time, knew well about the things that could be done to enter this space and make good returns out of it. He spent more of his time and energy building a fundamentally strong business model.
- The price of daily need items was one of the main problems solved by Radhakishan Damani and Dmart. D mart started offering things at a great price along with outstanding quality which earned them a loyal customer base.
The 5 Strategies Being followed by D Mart By the time he started Dmart, Radhakishan Damani had made a lot of money from the stock market by strategically investing in it. When he started D Mart, He focused on things that made his business fundamentally strong. This ensured DMart a slow but steady growth.
The 5 Strategies Followed by Dmart
Following are the 5 strategies being followed by D Mart to make their business model among the successful enterprises.
1. Investing in Infrastructure
- All thousands of outlets run by D Mart in the country function in their own buildings. They pay no rent, they don’t have to face legal notices from landowners, also they can do whatever they want in the land and building as it is owned by them, not a different person!
- No matter how expensive the price of the land is, D Mart buys the land in one of the key locations in a city and starts constructing a shop with their own money. In the long run, they end up saving a lot of money which they pass to their customers in the form of discounts.
2. Spending less on Staff, Decoration, and Unnecessary Stuff
- Dmart has made it a point to cut off costs from unnecessary stuff. If you ever happen to visit any of their outlets, you will notice the shop not to be very attractive. They don’t spend much on AC, TV, Music, and Decoration. Even there wouldn’t be unnecessary billing counters and staff.
- They focus on the things that really matter and not on peripheral modifications. the money they save from here is spent on things that really make the business. It is spent on offering further discounts which earn them returning customer base.
3. Cash Discount and Volume discount Because of less credit period
- Dmart has millions of loyal customer base all across India. This places them in a position that makes them purchase in bulk directly from the manufacturer.
- By avoiding middlemen Dmart saves a lot of money. Moreover, since it purchases in bulk, the manufacturer offers a special price that sets all competitors far away.
- What makes D Mart even special is that they have less credit period. That is, when they make a purchase from the manufacturer, they make sure to settle the bill within 7 days. This is when all other supermarket chains take a minimum of 30 days to settle the bill amount.
Less credit period gains D Mart some special Cash discounts which set all other competitors farther away. D mart passes this cash discount on to the customers which help in building a rapport with them and earning a more loyal customer base.
4. Slotting Fees
- D Mart charges a slotting fee from the manufacturers for displaying their products in D Mart’s rack. If you are a manufacturer and want to display your products in the racks of D Mart, then you should pay some money which is called slotting fees.
- D mart uses this money to increase their discount offering further hence expanding their loyal customer base. No local grocery shop or supermarket can enjoy this benefit.
5. Availability of Regional Products
- One of the reasons why people prefer purchasing from Dmart over Big Bazaar and Reliance Fresh is that DMart ensures the availability of local products in their shop while others don’t pay much attention to it. For example, if you are living in UP and want to purchase a particular product available in your local Kirana store from Big Bazaar, chances are that you won’t get it from there.
However, if you enter Dmart for the same purpose, you will be astonished to see all the products you are searching for in one place. This gains them the advantage even local Kirana stores can’t think of. People will prefer D Mart over Kirana Stores!
What one can learn from D Mart?
D mart is a great business book where one will get to learn a lot of things to make their business successful. Here are the things one can learn from D Mart..
- Focus on fundamentals. If the basic building blocks are strong, needn’t worry about anything, even if your growth is slow, it will be steady and has the potential to be humongous in the future.
- Spend on things that really matter. You might be prompted to spend your time, money, and effort on things that don’t really worth it. Be aware of what you are spending on.
- Be customer-centric – In any business, it is important that you be customer-centric. Customers’ satisfaction should be the primary goal of any business.
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