1) Ownership of all Properties – Avenue Supermarts currently owns all its properties which

eliminates rental cost. Rental costs typically account ~ 3 % – 8% for peers. It operates
predominantly on an ownership model (including long-term lease arrangements, where
lease period is more than 30 years and the building is owned by it) rather than on a rental
model. 
2) Revenue Per Square Feet – This is the real big difference between a great business and a
mediocre one. A Great business sweats its assets a lot more than the mediocre one. D-mart,
Reliance Retail and Future RetailNSE -0.51 % (Big Bazaar) have broadly the same product
portfolio but D-mart does sales of 28,136 per Sq. feet whereas Reliance and Future do half of
that at 13,901 Per Sq Feet and 12,914 Respectively. 
3) If there was one Ratio that we could have looked at and judged a Retail franchise, that
would be Inventory Turnover. D-mart kills competition here, its like the Zara of FMCG Retail.
D-mart Inventory Turnover is 14.18 (26 days) v/s 4.9x (75 Days) for Future Retail. 
4) Shift from Unorganized to Organized – We expect a very large shift from unorganized sector
to organized sector, Organized retail is expected to grow at 21% whereas unorganized retail
is expected to grow at 11.7%. We believe post GST, the pace of shift from unorganized to
organized will be faster which will benefit D-Mart. 
5) Growth led by Same Store Growth Plus Expansion – D-Mart’s Same store growth in last 3
years has been an astonishing with 26%, 22% and 21% for FY 2014,2015, and 2016. They
plan to add 2.1 Million Square feet or about 70 new stores by 2020 (Assuming every story is
30-35k Sq Feet). D-mart has been the fastest growing retailer and increased revenues from
2200 Crores in 2012 to 8,600 crores in 2016.
6) Employee Cost – D-Mart has the Least number of Employees per square foot i.e. 1 employee
for 800 Square feet whereas competitors have 1 employee for every 400-500 Sq. Feet (you
don’t need someone to help you buy Maggi, do you?). This makes D-mart far more efficient
compared to competition. 
7) D-Mart’s strategy lies in attracting the customers through groceries, which have a
comparatively lower margin, then selling products with higher margins. It procures
vegetables at a low price by paying its supplier faster than others (on an avg. 8 days as
against 60 days for its rivals) in exchange for an upfront discount.
8) D-mart focuses on everyday low costing (EDLC). It had implemented ERP system when it just
had 7 stores. Unlike competition, it hadn’t spread itself thin across India; instead, it had
clustered its stores across Maharashtra and Gujarat. Investments in an ERP platform and
distribution centre allowed the company to have a far more ecient supply chain than
competition, who did the same only when they achieved scale

9) Do get into online retail d-mart has launched Dmart ready, which is a 200 sq. ft. store.
Customers order online and pick the goods from the store.

10) A company pre-IPO prospectus states that to e"ectively utilise resources, the company has
higher racks—the upper ones used to store goods and the lower ones for display. Sounds
intuitive, but few retailers take the racks all the way to the ceiling like DMart does. The
result: More efficient storage of goods. Couple e cient operations with rapid expansion and
the result is a company whose stock the market can’t get enough of.

11) Disadvantage- India’s traditional retail industry is very ecient, there is hardly any wastage of
food, and the local kirana will deliver whenever you want, in the smallest possible quantity
and offer credit.
12)  DMart’s strategy is in contrast to the Future Group’s which relies more on a loyalty-driven
membership strategy where frequent shoppers are offered deals not available to others.
(DMart has no loyalty programme.) To get the best prices for groceries DMart follows a
simple strategy. It pays suppliers faster than others (on an average, 8 days as against 60 days
by its rivals) in exchange for an upfront discount which is then passed on to the customer.
Other savings are extracted through operational effciencies.

13) “They’d give buyers only as much discomfort as they could tolerate,” says a fund manager
who has studied their model. (He declined to be named citing company policy.) The air
conditioning was turned down, the aisles were not too widely spaced. Store employees were
hired by an agency—“we later hired the better ones,” says Noronha —to cut costs and deal
better with peak demand. DMart employs only half the number of employees per square
feet as rivals, according to a research note by Ambit Capital. The company also discounts
products according to the catchment area. Shopping at the Powai store would be 5-7
percent more expensive than at the Chandivali one, according to the fund manager. The
assortment also varies. DMart’s philosophy is to only sell items that have high turns.
14) The company says that any town with a population of more than 100,000 holds the potential
for a DMart store. It will have to account for regional variations in the food palette, but is
condent of getting it right.
 The company says that any town with a population of
more than 100,000 holds the potential for a DMart store. It will have to account for regional
variations in the food palette, but is condent of getting it right.