Indian Retail Czar - Arrived
When I entered the retail business with our first store at Juhapura in the year 2004 I hardly knew much about this sector. Having spent most of my professional career as an advertising and media executive, food-grocery retail remained alien to my knowledge.
While I was struggling to learn the ropes of retail I saw many corporates rode the retail wave and there were scores of retail chains cropped up in food-grocery domain. Amongst the prominent ones were Future group, Adanis (which later sold the chain to Reliance), Reliance retail, Subhiksha, More (Birlas) etc. But there was one name which never made it to this ‘prominent’ list’ – D-Mart. It is irony that most of these ‘prominent retail chains’ who were touted as a game changer of Indian retail industry are struggling today while D-Mart is the talk of the town.
Much of the credit for this success of D-Mart goes to its approach to the organized retail. While most of the Indian retail chains blatantly copied the western formats, D-Mart remained unperturbed with this wave and rather continued to work out a niche for itself. This slow but steady approach helped the chain to create its own unique slot in the consumer mind-space.
To further elaborate on this point let me compare the two retail chains. Kishore Biyani has mentioned about ‘chaos of Indian bazaar’ in his book – ‘It happened in India’. His idea was to keep this experience of ‘unorganized chaos’ intact with his organized retail chain as he believed that the Indian consumers were accustomed to purchasing that way.
Mr. Biyani was successful in creating initial hoopla around the organized retail as he was a pioneer of organized retail in India but later on he ended up in aping the western retail chains and could not create the much needed differentiation which Indian consumers needed. Indian consumers were looking for something beyond an intangible chaos. They wanted a store which supplies them with the inventory which is closer to their needs. They were fine with limited inventory but it should fulfil their needs. D-Mart worked on it and created a ‘need inventory’ in its store. With this lean inventory it was easier for the chain to negotiate good price and offer discounts. This helped.
Last year I got the opportunity to explore the UK market. I was amazed to see the typical Indian retail stores thriving amidst giants like Tesco and Sainsbury’s. While in India we were trying to copy the formats of western stores, in the UK, the formats were customized to suit the requirements of Indians staying there. Only D-Mart did something similar in India and results are there to be seen. Few smart moves of D-Mart are listed below which contributed to its growth:
· Consumer focus: Indian consumer even today is averse to purchasing lifestyle and electronics goods from the food-grocery hyper markets. That is the reason these sections in the hyper market does not carry huge range as compared to the specialized electronic or a lifestyle store. The limited inventory in hyper markets thus add to the cost and eventually it becomes dead or has to be disposed of by way of discounts and promotions. D-Mart smartly never forayed into this. It kept its inventory lean and focused on the basic needs of food-grocery.
· Indianize Format: D-Mart is a ‘Pure Indian Kirana format’ as it never tried private label and e-commerce. We tried e-commerce with our chain of supermarkets but failed miserably. E-commerce is a highly investment oriented format and it works on brand pull. You need to pump in huge monies to gain a sizeable traction on your e-commerce site. D-Mart ignored this fad and instead worked on creating a physical network of stores in the states it was comfortable with. This helped in creating a steady footfall in all its store as customers knew the chain well. It did not go to newer states rather consolidated its presence in the same state by opening new stores there.
· No Private Brands: We are into private brands and doing reasonably well. D-Mart avoided private brands. It needs huge investment to promote your private brand and sometimes inventory management is also difficult though it gives good margins if you are able to manage this. Thus someone might debate the decision as this is the only avenue from where a retailer can think of getting good margins. But with his success Mr. Damani has broken all the stereotype attached to the organized retail and proven everyone wrong.
We are sharing the same space with Mr. Damani and hence his success story is a huge personal inspiration. It is a story of self-belief. Take away from his success story is that there are no written rules to succeed. You can break the stereotype and still grow and make your mark.
A friend suggested me to launch my own IPO soon and thus ‘ride this success wave’. I winked at him and said I learnt from Mr. Damani to remain unperturbed with any wave and rather to work diligently to create my own niche while launching an IPO.
(Writer is the Founder & Chief Mentor of Hearty Mart, www.heartymart.com)