To Study the Consumer Behaviour &

Impact of DMart in Retail Sector

SUBMITTED BY:

PURUSHRUT SANJAY KHILARI

SEMESTER V(2018-2019)
 CHAPTER 1
INRODUCTION
INTRODUCTION

1.1 Introduction of Consumer behaviour

Consumer behaviour is the study of how individual customers, groups or organizations select,
buy, use, and dispose ideas, goods, and services to satisfy their needs and wants. It refers to the
actions of the consumers in the marketplace and the underlying motives for those actions.

Consumer behaviour emerged in the 1940s and 50s as a distinct sub-discipline in the marketing
area. Consumer behaviour is an inter-disciplinary social science that blends elements from

psychology, sociology, social anthropology, anthropology, ethnography, marketing and

economics, especially behavioural economics. It examines how emotions, attitudes and

preferences affect buying behaviour.

Marketers expect that by understanding what causes the consumers to buy particular goods and
services, they will be able to determine—which products are needed in the marketplace, which
are obsolete, and how best to present the goods to the consumers.

The study of consumer behaviour assumes that the consumers are actors in the marketplace. The
perspective of role theory assumes that consumers play various roles in the marketplace. Starting
from the information provider, from the user to the payer and to the disposer, consumers play
these roles in the decision process.

The roles also vary in different consumption situations; for example, a mother plays the role of
an influencer in a child’s purchase process, whereas she plays the role of a disposer for the
products consumed by the family.

The study of consumer behaviour is concerned with all aspects of purchasing behaviour – from
pre-purchase activities through to post-purchase consumption, evaluation and disposal activities.
It is also concerned with all persons involved, either directly or indirectly, in purchasing
decisions and consumption activities including brand-influencers and opinion leaders. Research
has shown that consumer behaviour is difficult to predict, even for experts in the field.
However, new research methods such as ethnography and consumer neuroscience are shedding
new light on how consumers make decisions.

Definition:
1. According to Engel, Blackwell, and Mansard, ‘consumer behaviour is the actions and
decision processes of people who purchase goods and services for personal
consumption’.
2. According to Louden and Bitta, ‘consumer behaviour is the decision process and physical
activity, which individuals engage in when evaluating, acquiring, using or disposing of
goods and services’.

1.2 Introduction of Retail Sector

The word retail is derived from the French word Retailer that is to cut a piece, a break down. A
retailer buys in large quantity from the middleman or manufacturer and breaks the bulk in small
quantity, sells or markets them in small quantity to meet the needs of customers. He acts as a link
between manufacturer or middleman and consumer. He delivers the product or service in a form,
size, that is acceptable to final consumer. Retailer is described as merchandising arm of
manufacturers or a neck in the bottle of distribution.

Retail as trade has developed over the period of time, from un organized street vendor or seller
like ‘SUBJIWALA’, PAANAWALA to organized shops like super bazaars, Departmental stores.
Today we see revolution in the field of retail business with entry of firms like ‘Big Bazar’
‘DMart’ McDonald, Walmart that are not just delivering goods, but also satisfying needs and
wants of people there by ensuring customer -delight. Retail Sector has developed as a more
organized activity adopting functions of marketing in distribution of goods or service.

The Retail Sector of Indian Economy is going through the phase of tremendous transformation.
The retail sector of Indian economy is categorized into two segments such as organized retail
sector and unorganized retail sector with the latter holding the larger share of the retail market.
At present the organized retail sector is catching up very fast.
The impact of the alterations in the format of the retail sector changed the lifestyle of the Indian
consumers drastically. The evident increase in consumerist activity is colossal which has already
chipped out a money making recess for the retail sector of Indian economy.

With the onset of a globalized economy in India, the Indian consumer's psyche has been
changed. People have become aware of the value of money. Nowadays the Indian consumers are
well versed with the concepts about quality of products and services. These demands are the
visible impacts of the Retail Sector of Indian Economy.

The Indian retail sector is highly fragmented with 97 per cent of its business being run by the
unorganized retailers like the traditional family run stores and corner stores. The organized retail
however is at a very nascent stage though attempts are being made to increase its proportion to 9-
10 per cent by the year 2010 bringing in a huge opportunity for prospective new players. The
sector is the largest source of employment after agriculture, and has deep penetration into rural
India generating more than 10 per cent of India’s GDP.

Table: 1.1 Comparative Penetration of Organised Retail (in %)

Source: Ernst &Young, the Great Indian Retail Story, 2006

Large Indian players like Reliance, Ambanis, K Rahejas, Bharti AirTel, ITC and many others are
making significant investments in this sector leading to emergence of big retailers who can
bargain with suppliers to reap economies of scale.
Hence, discounting is becoming an accepted practice. Proper infrastructure with modern
facilities is a pre-requisite in retailing, which would help to modernize India and facilitate rapid
economic growth. This would help in efficient delivery of goods and value-added services to the
consumer making a higher contribution to the GDP.

Definition:

Retail Sector noun [ S ]

It is the part of a country's economy that is made up of businesses that sell goods through stores, on the
internet, etc. to the public:

1) Share prices in the retail sector have been driven up by takeover activity.

2) The retail sector has held up well.

Introduction of DMart

Avenue Supermarts Ltd is an India based company engaged in the business of organized retail
and operates supermarkets under the brand name of D-Mart. It provides products under the
categories of Foods, Non-Foods (FMCG) and General Merchandise and Apparel. Foods category
includes products such as dairy, staples, groceries, snacks, frozen products, processed foods,
beverages and confectionary and fruits and vegetables. Non-Foods (FMCG) comprises of home
care products, personal care products, toiletries and other over the counter products. General
Merchandise and Apparel includes bed and bath, toys and games, crockery, plastic goods,
garments, footwear, utensils and home appliances. All the business operations of the company
are principally carried out in India. DMart’s core objective is to offer customers good products at
great value.

With their mission to be the lowest priced retailer in the regions they operate, business continues
to grow with new locations planned in more cities.

The supermarket chain of DMart stores is owned and operated by Avenue Supermarts Ltd.
(ASL). The company has its headquarters in Mumbai.

* The brands D Mart, D Mart Minimax, D Mart Premia, D Homes, Dutch Harbour, etc, are
brands owned by ASL

1.3 Statement of Study

‘‘THIS STUDY AIMS AT UNDERSTANDING THE CUSTOMER’S BUYING BEHAVIOUR &

IMPACT OF DMart IN RETAIL SECTOR.”
1.4 Company profiling

DMart has not shut a single store and most recently, also became the first
retailer to cross the billion dollar market profitability.

Early Stage:-

 In 2002 DMart launched its first store in Powai which was started by Mr Radhakishan
Damini and his family to address the growing needs of the Indian family.
  In 2007 DMart entered Gujarat with its first store in the state. DMart began its expansion
and went on to open various stores in Ahmedabad, Baroda, Pune, Sangli and Solapur.

 In 2010 the total store count of the company crossed 25 stores and the audited
consolidated revenue crossed Rs 1000 crore mark.

.
 In 2012 the store count of the company crossed 50 stores

 By 2012-13 – DMart had soared its revenues from Rs. 260 crores in 2006-07 to Rs. 3,334
crores, making them India’s third-largest branded retail chain.

 In 2014 the store count of the company increased to and they had reached to account for
73 stores across Maharashtra, Gujarat, Hyderabad, and Bangalore, and were also
projecting to hit Rs. 4,500 crores in revenues this year.

 In 2015 audited consolidated revenue of the company crossed Rs 5000 crore mark.

 In 2016 the store count increased to 110 and the consolidated revenues crossed Rs 7500
crore mark. The company clocked turnover of Rs 1.20 crore in 2016-17.

 On 2 March 2017 filed Red Herring Prospectus with SEBI for raising Rs. 1870 crore. The
IPO was open through the book building route from 8 March 2017 to 10 March 2017
with Price Band of Rs 295 to Rs 299 per share.

 On 2 March 2017 filed Red Herring Prospectus with SEBI for raising Rs. 1870 crore. The
IPO was open through the book building route from 8 March 2017 to 10 March 2017
with Price Band of Rs 295 to Rs 299 per share.

 On 2 March 2017 filed Red Herring Prospectus with SEBI for raising Rs. 1870 crore. The
IPO was open through the book building route from 8 March 2017 to 10 March 2017
with Price Band of Rs 295 to Rs 299 per share.
 As of 16 September 2018 the market capitalization of D Mart is close to ₹95,000
crore. This is 33rd rank for all listed companies in Bombay Stock Exchange.

 D-mart added 24 stores during the financial tear 2018 which is the
highest number of stores additions in a year since 2012.
Today’s scenario:-

D-Mart's biggest edge over other retailers is its strategy of offering merchandise to consumers at
a lower MRP. The retailer has continued to do so even at the expense of its margin growth. The
retailer in its post results commentary said that its operating costs went up due to preloading of
certain expenses around capability building across infrastructure and people. It also said that it
overspent during the festival season by keeping the store open for a longer duration which, in
return, hit its margins.
The value retailer is certainly under pressure from e-commerce retailers as well as the likes of
Reliance Retail, and is forced to work at the cost of its margins in order to get more shoppers to
shop at its stores. The likes of Reliance and Amazon have deep pockets and are leaving no stone
unturned to penetrate into D-Mart's stronghold, which is mid-market India.
Also, every store reaches a saturation point after being in operation for 5-8 years, and most of the
D-Mart stores are old. The next level of growth and profits always comes from newer stores, and
for D-Mart to grow at a rate of 30-40 per cent year-on-year (which has been its growth rate all
these years), it will need to open at least 25-30 stores every year, which is a tall task. This leads
to margin compression. The retailer has added just about nine stores in the FY19 so far.
The analyst community expects a stock price correction. "We expect stock to correct over near
term given a miss in profits. For a flattish year-on-year profits in the December quarter, the stock
is quite expensive " says Abneesh Roy, Senior Vice President, Edelweiss Securities.

So far, the company has followed an ownership or long-lease model, which has helped cut costs and
boosted margins. Since the beginning of fiscal 2018, D-Mart has maintained gross margins of at least
7.5%, compared to the 3-4% margins of its nearest rival, Future Retail Ltd.

However, challenges in acquiring land at suitable locations, getting necessary permissions and requisite
approvals have prompted the shift in strategy. “That’s why we’ve been a little less stringent," Noronha
said, adding, “If you would have said eight years back, whether we want to do a lease, we would have
downright refused. Today... we are open to it." D-Mart is also looking to ramp up its e-commerce
presence.
In January this year, Avenue Supermarts turned its e-commerce venture, Avenue E-commerce
Ltd, from an associate company to a wholly owned subsidiary.

D-Mart has also recently stepped up promotional activity, and the company is seeing more
traction at its “click and collect" kiosks.

Apart from click and collect, the company is running home delivery pilots in “D-Mart dark
areas" in Mumbai—neighbourhoods in the city where D-Marts don’t exist. The company charges
for its home deliveries and is mainly focused on groceries.

Much of the company’s focus, as well as comparisons to Walmart, stems from Damani’s
decision to follow a store-ownership model. The company has spent over Rs 23 billion on
acquiring land and buildings but either owns most of its stores or has them on a 30 -year long-
term lease. This is, in part, what has forced it to rack up debt of a little over Rs 1000 crore; a
certain amount of its IPO proceeds have been allocated towards repaying this debt.

However, its ownership model crucially allows it to save on rental costs. A recent ‘Yes
Securities’ analyst note points out that D-Mart’s rental costs are only 0.2% of total sales
compared to 8% for Biyani’s Future Retail.

It may appear strange that while buzz is so strong around India’s e-commerce industry and
companies like Flipkart and Snapdeal, the best-performing IPO in recent corporate history is a
brick-and-mortar supermarket.

And yet, D-Mart’s stringent focus on profitability offers lessons to both physical and online
retailers, both of which have stumbled in the last few years.
After burning through billions in venture capital funding and thousands of layoffs, India’s e-
commerce industry is finally growing up and shifting towards a focus on profitability. On
similar lines, traditional brick-and-mortar retailers, which have burnt their hands in expanding
too quickly and experimenting too rapidly, are slowly taking a reality check.

All this means that D-Mart’s future, while bright, is not without risk. The company’s success
so far stems from its blinkered approach towards product categories and geographic location.

As D-Mart chief Neville Noronha put it last year, the company succeeds because it does
“small things repeatedly and consistently”. Can it keep doing this, especially when its revenue
growth in fiscal 2015 and 2016 was lower than the annual revenue growth seen in the
preceding two years? As the company moves forward, its biggest competition will not only be
keeping true to its business model but also staving off the threat posed by rivals that are
slowly maturing and looking to take a bigger share of the retail pie.

1.5 Mission Statement

A mission statement states the objective for which a company exists DMart’s mission statement is to
be the lowest priced retailer in the regions they operate, as the business continues to grow with new
locations planned in more cities. At DMart with continuously research, identifying and making
available new products and categories to fulfil customers’ everyday needs at the best value. Our
mission is to be the lowest priced retailer in our area of operation.

1.6 Vision Statement

DMart has expanded upon its vision statements in the recent years. Its vision statement lays stress on
its fundamental values like service, product excellence and innovation in the retail sector.

1. We believe that we are on the face of the earth to make great products and that’s not changing.

2. We are constantly focusing on innovating & ways to bring down the prices.
3. We believe in research, identify and make available new products and categories that suit the
everyday needs of the Indian family.

4. Our vision is to provide the best value possible for our customers, so that every rupee they spend on
shopping with us gives them more value for money than they would get anywhere else.

1.7 SWOT Analysis of DMart

1/2 Strengths are defined as what each business does best in its gamut of operations which can
give it an upper hand over its competitors. The following are the strengths of DMart:

 Focus on long-term: Damani, the founder of D Mart is an investor and thus the company
has been focused entirely on long-term gains. This has made the company maximise its
returns through a value is driven pricing strategy.
 Slow scaling up: D Mart started off on a very low key note and slowly took its time to
move up the ladder. This gave the company a better control and deeper understanding of
its supply chain and also helped them manage the bottom line better.
 People-centric management style: D Mart has a very good employee policy in place and
is very transparent in its employee relations. They also have a good relationship with
vendors and suppliers and the stakeholders are happy.
 Discount Policy: One factor that delineates D Mart from its competitor is its huge
discount policy. The retailer sells essential goods at a flat discount price which most
competitors cannot match and this helped them penetrate the market
 Clear price based differentiation: D Mart never followed the trends set by other
competing retail brands but believed in setting their own trends. They captured the market
through a clear price based differentiation and priced their goods at significantly lower
prices than competitors.
 Weaknesses in the SWOT analysis of DMart:

Weaknesses are used to refer to areas where the business or the brand needs improvement. Some
of the key weaknesses of D Mart are:

 Focus on certain places: Quite unlike their competitors, who are present everywhere, D
Mart has focused more on the Western States and has a very low presence in the South.
This has restricted them from gaining market prominence.
 Slow growth: D Mart has established almost 16 years ago much before the retail boom set
a fire in India. However, it has not been able to capture the market even as much as many
of the later entrants primarily because of its long-term focus.
 Sustainability of low pricing: The Company has a zero credit policy and thus vendors
and suppliers give them a much better price which is how the company is able to afford the
low prices that the competitors cannot imagine.
 No frills : D Mart follows a no-frills approach where the focus in to cut costs wherever
possible. Their facilities are basic and lack the frills of most upmarket retailers. The
customers who come here essentially look at the low prices of products on offer. So thus
the sustainability of this differentiator is questionable.

Opportunities in the SWOT analysis of DMart:

Opportunities refer to those avenues in the environment that surrounds the business on which it
can capitalize to increase its returns. Some of the opportunities include:

 Technology: Technology has a lot to offer to retailers in terms of in-store experiences and
retailer can use IoT, artificial intelligence etc to create value-adding services to their
customers for which a premium can be charged.
 Personalization of services: Customers are looking for personalized services for which
they are willing to pay extra. Retailers should capitalize on this propensity to pay more and
increase the quality of their services.
 Threats in the SWOT analysis of DMart:

Threats are those factors in the environment which can be detrimental to the growth of the
business. Some of the threats include:

 Online retailers: People in cities especially are highly lethargic about leaving their homes
and prefer to shop online today. Companies like Amazon and Flipkart thus become major
threats to most retailers.
 Online Start-ups: The hottest trend in India is online start-ups. Many of them are
aggregators who bring together the supplier and the customer cost-effectively. These
companies are the emerging threats more so because many new brands are cropping up in
the aggregation market primarily because of lower barriers to entry.

2/2

STRENGTH WEAKNESS
 OPCHAPTER 2
RESEARCH
METHODOLOGY
2.1 Research Methodology

Definition:

Project Methodology refers to the methods used for completion of projects. It include
the technique used for collection of data.

Research comes from two sources that may be called “Paper and People”. “Paper” refers to
the inner world of liberty where as “People” refers to the outside world of living people.
Paper sources is time saving as it gives ready information. People sources includes
methods such as interview, questionnaire, field survey, observation technique, etc.

The methodology section allows the reader to critically evaluate a study’s overall validity and
helps answer two main question: How was the data collected? How was it analysed?

a. Data collection

In this study, most of the data collection instrument used is questionnaire method. The
questionnaire has been designed with both open ended and close ended question. Apart
from this, the research instrument consist of primary and secondary data collected for
study.

Primary data: Here first-hand information is obtained by using questionnaire method.

Moreover, information was disseminated by the department head.

Secondary data: Here information is obtained from the brochure of Apple, books,
website, generals, magazines, newspaper, etc.

b. Sample design
 • Sample technique : Random sampling, questionnaire

• Sampling unit : Individual

• Sampling size : 100 respondents

• Sample area : Navi Mumbai, Dombivili.

2.2 Objectives of study

• To understand the brand management

strategy

• To understand the significance of Brand

management

• To evaluate the brand value in market

• To evaluate the customer perception on the

brand

• To compare the effectiveness of brand in

market

2.3 Hypothesis

a) Ho : There is no significant associate between brand name and level of

satisfaction on
Apple users. H1 : There is significant associate between brand name and level of
satisfaction on Apple
 users.

b) Ho : There is no significant difference between pricing strategy of Apple brand

products
and other products H1 : There is significant difference between pricing strategy of Apple
brand products and
other products

c) Ho : There is no significant difference between promotional strategy of Apple

brand
products and other product. H1 : There is significant difference between promotional
strategy of Apple brand products
and other products.

d) Ho : There is no significant difference between the product feature of Apple products

and
other products. H1 : There is significant difference between the product feature of
Apple products and
other products.

2.4 Scope and importance of study

Scope:

This study was conducted in NAVI MUMBAI and DOMBIVLI city for primary data collection.
It is based on the response collected from customer. The study is undertaken to understand
the brand management and its influence on customer.

Importance:
 This research study is significant as it enables to find customer’s perception on the brand
Apple and it is been analysed. It helps to understand customer views and make appropriate
changes in the strategies to reach out to customer in a better way in the terms of companies
view.

2.5 Limitation of study

Study is restricted to the geographical limits of NAVI MUMBAI and DOMBIVLI. Limited period
of survey and limited sample size (100 individuals). There were few responses which
were vague or not answered and some adopted to choose two options that were
available, to get complete and accurate information required for the study.

2.6 Literature review

According to Anna Glenn, “the Apple brand strategy is all about the experience.” Based on
study by Wired.com as cited in Anna Glenn found that: Apple’s emotional branding, a brand
that is felt in the heart and mind of the consumer”, is the key to its survival.

Apple’s brand is reflected through their core beliefs about innovation, imagination and design.
It is promoted through their products, advertisement and customer experience. According to
Feng (2014), there are four factors to build a strong brand name which are brand positioning,
brand sponsorship, brand development and brand name selection.

Besides that, Feng (2014) claim that: This factor is effective to build a strong brand because
product brand development refers to the process of growing the brand.

Brand development strategy is based on internal and external business environment, in order
to establish this advantage and make the advantage keep continuing. While, Anna Glenn
stated that “Basically, there are three types of brands: unique, corporate and range. A unique
branding strategy is built around an established brand that stands for one thing.” Apple’s
strategy is a corporate branding strategy that revolves around its emotional experience with its
products. To be an emotional brand, it must have three things in common. The company must
project a strong humanistic corporate culture; have a unique visual and verbal vocabulary; and
establish a connection with its consumers.
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