Indian Retailer Which Offers The Best Customer Experience

Avenue Supermarts Ltd (known as Dmart), the FMCG retail giant offers the best customer experience. Being our self as a customer, we would prefer day to day needs in an affordable price. The company’s mission is to provide the best value to the customers so that every rupee they spend gives them more value for money. The key success behind Dmart is Mr. Radhakrishna Damani, who is one of the finest value investors in the stock market.

As of June 30, 2018, the company had 157 stores with retail business Area of 5 million sq. ft. across Maharashtra, Gujarat, Daman, Andhra Pradesh, Karnataka, Telangana, Tamil Nadu, Madhya Pradesh, Rajasthan, NCR, Chhattisgarh and Punjab.

Making the goods available at everyday low price (ELDP) is the secret sauce for the success. This ELDP model helps to move inventories quicker. The key ingredients for best customer experience are:

• Right product variety: Dmart focuses on the most popular daily need products. This helps company to bring in sales velocity by stocking the bestselling products identified based on local preferences. Thus their popular products have worthy discount to improve from any footfall.
• Avoiding Rental Payments: The margins FMCG companies are often diluted due to high lease payments. Dmart focuses on the owned stores model which aids the company in better margins than its peers. (7% margin vs 3% of Future Retail as on FY17). The company makes upfront payment to the vendors which aids to healthy relationships and better discounts.
• Efficient Supply Chain: Mr. Damani is amongst the few and the early bidder to break the supply chain for better efficiency. Dmart directly purchases the goods from the manufacturer eliminating the margins of distributors and wholesellers. The company is planning to follow the cluster approach i.e. new openings of the stores in the existing states i.e. Gujarat and Maharashtra. This approach would result into saving of supply chain cost. Today, Dmart has built a robust supply chain management involving quality control and pilferage control.
• Robust growth: Dmart has compounded its business at 21% over FY12-17. Its PAT has grown remarkably at 51% over the same period. With beginning in 2002 with just one store, the company has 157 store today.
• Financials: Considering at the recently concluded quarter, Q1FY19, the total revenue stood at Rs. 4559 crore, up by 26.7% YoY. EBITDA for the quarter stood at Rs. 423 crore, growth of 39.4% YoY. Also, net profit up by 43.4% YoY to Rs. 251 crore. PAT margin improved from 4.8% in Q1 FY18 to 5.5% in Q1 FY19. Conclusion: Huge growth potential lies for Dmart on account of Geographical expansion as the company has majority presence in Gujarat and Maharashtra. Cost benefits availed by the company are ultimately passed on to the ultimate customers which builds a brand. The company has defined the customer needs as their mission. Thus, these factors leads to best customer experiences.