Avenue Supermarts is not yet in the league of Wal-Mart. But Radhakishan Damani, the astute stock market investor who owns it, was deeply inspired by Sam Walton, the legendary founder of America’s biggest retail chain, when he entered the retail business in 1999. It all began in 1999 when Damani decided to test the waters by taking up a 5,000 sq ft Apna Bazar franchisee in Nerul. After gaining hands-on experience of how the retail trade worked, Damani took the plunge by setting up D-Mart in 2002.
Fifteen years later, D-Mart has not only become a household name but also the most valued retailer in the country. A 100% gain on listing has given Avenue Supermarts, which owns the retail chain, a market cap of over Rs.38,000 crore. D-Mart operates 118 stores (as of January 2017) in about 41 cities compared with 231 stores operated by Future Retail in 238 cities (See: Spot the difference). D-Mart has conservatively expanded, without much reliance on debt and by focusing on selected geographies. Against 25 states that Future Retail operates in, 73% of D-Mart’s stores are located in Maharashtra and Gujarat. In FY16, 66% of its revenue came from Maharashtra, followed by 19% from Gujarat.
It prefers to open new stores in a tried-and-tested market in a densely populated middle class or lower middle class locality. “We focus on existing markets which we know very well. When a particular store is generating very high return on investment and is flooded with customers, then that is the right time for us to add a new store,” says Neville Noronha, managing director, Avenue Supermart. Even as D-Mart stuck to selected markets, it kept growing on two counts: growth in same-store sales and opening up of stores in existing markets (See: Meteoric rise). But the concentrated presence has not come at the expense of growth. Avenue Supermarts currently clocks a turnover of over Rs.8,500 crore.
Besides the two western states, D-Mart also has a presence in Telangana (13), Karnataka (7), Andhra Pradesh (4), Madhya Pradesh (3), Chhattisgarh (1) and NCR (1) Daman (1) and Rajasthan (2). In the current fiscal, NCR, Daman and Rajasthan were the new markets where the value retailer began its innings with one store each. “