DMart, the discount supermarket chain by Indian billionaire Radhakishan Damani, plans to boost its store count fivefold, news agency Bloomberg said on Thursday. According to the report, DMart seeks to its grow market share and hold its own against aggressive expansion from the likes of Mukesh Ambani’s Reliance Retail Ltd.
Neville Noronha, chief executive officer of Avenue Supermarts, which currently runs the fourth-largest number of convenience stores in India, said the company could scale up the chain known for its knockdown prices on everything from lentils to laundry powder to 1,500 supermarkets from 284. However, he declined to give a timeline or estimate the investment needed.
Avenue Supermarts is likely to add 135 DMart outlets by March 2024, according to a report this month by Mumbai-based brokerage Motilal Oswal.
“Large players can happily operate without worrying about each other,” Noronha said. “There’s no need to worry about that for another 20 years – the headroom for growth is awesome.”
According to the report, the company opened its highest-ever 50 stores in the year through March, its most ever, and wants to tap India’s teeming middle-class, which according to some researchers could account for as much as half of country’s almost 140 crore population.
Amid inflation, this segment is also looking hard for bargain deals, something DMart is known for. Besides adding stores, DMart is also attempting to scale up its unprofitable e-commerce business.
“The sky’s the limit for any brick-and-mortar retailer in the country,” Noronha said. “You have to focus on opening more and more stores” as the organised grocery market in India was nowhere near saturation, he added.
Damani, the 68-year-old self-made billionaire and founder of DMart who steered his supermarket empire to a blockbuster listing in 2017. The stock has jumped 1,370 per cent since listing, giving Damani a net worth of $22.1 billion, according to the Bloomberg Billionaire’s Index.
India’s organised retail market is still at a nascent stage and estimated by the government’s export promotion agency to be growing between 20 per cent and 25 per cent annually.
The company’s net income for the June quarter surged more than six times to Rs 640 crore ($80.6 million) compared with the same period last year as the local economy recovered from the pandemic-related curbs. Revenue also nearly doubled. Its online business, however, has remained a weak spot, which has dragged down its stock.
Avenue Supermarts shares are down 5.8 per cent this year, lagging the S&P BSE Sensex which has advanced 3.4 per cent. Its e-commerce business, spread across 12 Indian cities, posted a loss of Rs 142 crore in the latest quarter in the face of intense competition.
The CEO conceded that breaking into the online retail market has been “tough,” but that DMart plans to add more online fulfilment centres to the two current ones in Mumbai.
DMart has also been experimenting with a couple of smaller shop formats in Mumbai and Hyderabad, where real estate is expensive.