India’s budget grocery chain eyeing five-fold growth in already hot market
Indian billionaire Radhakishan Damani’s discount supermarket chain, DMart, is planning to increase its store count by five times as it seeks to increase market share and hold its own against aggressive expansion by the likes of Mukesh Ambani’s Reliance Retail Ltd. .
Avenue Supermarts Ltd., which currently runs the fourth-largest convenience store in India, could grow the chain known for its knock-on prices on everything from pulses to laundry powder to 284 to 1,500 supermarkets, said CEO Neville Noronha. said in one Interview.
He declined to give a timeline or estimate the investment required.
“The big players can work happily without worrying about each other,” Noronha said. “There’s no need to worry about it for the next 20 years – the headroom for growth is awesome.”
The company opened its highest ever 50 stores in the year through March, its highest ever, and is looking to tap India’s middle class, which could be as much as some researchers say half Out of the country’s 1.4 billion population.
Amid rising inflation, this segment is also looking tough to bargain deals – something that DMart is known for. Apart from adding stores, DMart is also trying to grow its unprofitable e-commerce business.
“The sky is 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 organized grocery market in India was not close to saturation, he said.
Damani, the 68-year-old self-made billionaire and founder of DMart, which catapulted his supermarket empire to a blockbuster list in 2017. The stock has jumped 1,370% since its listing, giving Damani a net worth of $22.1 billion. Bloomberg Billionaires Index.
neonatal stage
India’s organized retail market is still in its infancy and is growing amid estimates by the government’s Export Promotion Agency. 20% to 25% annually,
According to a report earlier this month by Mumbai-based brokerage Motilal Oswal, Avenue Supermarts is likely to add 135 DMart outlets by March 2024.
The company’s net income for the June quarter rose more than six times to 6.4 billion rupees ($80.6 million) from the same period last year, as the local economy recovered from restrictions related to the pandemic. Revenue also nearly doubled.
However, its online business remains a weak spot, which has dragged its stock down.
Shares of Avenue Supermarts are down 5.8% this year, trailing the S&P BSE Sensex which advanced 3.4%. Its e-commerce business spread across 12 Indian cities, Posted a Loss 1.42 billion in the latest quarter in the face of intense competition.
Noronha acknowledged that entering the online retail market has been “difficult”, but DMart plans to add more online fulfillment centers to the two existing centers in Mumbai.
DMart is also experimenting with some smaller store formats in Mumbai and Hyderabad, where real estate is expensive.
‘comfort food’
It has also started selling pizza from one of its supermarkets as it likes Domino’s Pizza Inc.
“As the economy grows, people have less time, they want comfort food,” Noronha said. “We believe we can offer the same high quality at significantly lower prices.”
Noronha said high inflation Discount chains will get a boost.
“The general understanding in times of inflation is that people look for more deals,” he said. “People want products to be available at cheap prices, so it helps a business like ours.”
–PR with the help of Sanjay and Siddharth Shukla.