Why Is D-Mart Cheaper Than Other Supermarkets?

 

The local mom and pop shops have faced fierce competition by hypermarkets and supermarkets that have cropped up since the early 2000’s and have emerged as the customers preferred choice owing to factors like affordability and cheaper prices for otherwise expensive products sold at local shops.

One such chain of hypermarkets is D-Mart, the brain child of Radhakishan Damani, which commenced operations pan India in 2002 and is still one of the preferred destinations for grocery shopping in India. 

D-Mart follows “Everyday Low Cost- Everyday Low Price” model, which means it positions itself as the lowest-price retailer network across the country, which but naturally kills competition and increases sales which in turn brings profits for the retail chain.

Penetration strategy wherein the retailers introduce products at a much lower price to capture a larger market share, can only work up to the loss-bearing limit of the organization, after which they are compelled to raise prices and focus on profits if they wish to keep themselves afloat. 

But this doesn’t seem to be the case with the ever-low pricing strategy of D-MART, that seems to have never even touched the loss-bearing limit and instead goes onto make larger profits year-on-year.

D-Mart sells goods at ridiculously low prices. Yet, they still make a profit and have managed to do more than just sustain. Here’s how:

Dealing in day-to-day essentials

Operating on a highly efficient B2C model, D-Mart mainly deals in products that are procured by individuals on a daily basis and the demand for which is at an all-time high.

Their prices indicate a deviation from the elasticity of demand because even the highest demand is met with extremely reasonable prices that no other store is able to provide.

Living in a price-sensitive society, customers are naturally attracted to D-Mart which furthers the demand for their products, in turn increasing their sales and thus profits are at an all-time high.

Shelving fees

A slotting or a shelving fee is a one-time charge that the manufacturers pay to place their products on the retail shelves of D-Mart.

A higher price is charged for shelves that are bound to catch the eye of potential customers which has a high probability to convert in profitable sales.

The shelving fees is a relatively novel plan of action that further helps reduce prices of products on display.

Low maintenance cost

D-Mart’s main focus is to provide consumers with all they are looking for under the same roof. They maintain simplicity in their interiors, with minimal spending on fancy interiors or festive decorations.

Very few billing counters and numbered employees working in the mart, further help save monetary resources.

The same funds are then utilized to provide attractive discounts and incentives to their customers.

Low price purchase

D-Mart returns the payment to their vendors way before the deadline.

Manufacturers also prefer dealing with stores like D-Mart, that don’t deal in credit purchases or delay payments. It is very convenient for the manufacturers to receive payments before hand so that they can meet their own needs as well.

This practice helps D-Mart to avail massive cash discounts from the manufacturers.

Self-owned stores

D-Mart store owners are usually financially sound with little to no debt.

Most of the D-Mart stores are owned by themselves which reduces retail cost and helps positive cash flow.

Renting out a place to operate a D-Mart would be futile, as a major part of your profits would be diverted towards paying a hefty monthly rent especially if the store is located in a metropolitan city where property rates are always touching the sky.

Cheap goods

Good retailers always know they target audience. By providing products at an affordable price, they attract a much wider range of customers.

Customers are usually perplexed by the availability of a diverse range of products at such cheap rates, that they end up stocking up on everything that they can get their hands on, but of course, subject to their predetermined shopping budget.

These are the 6 main reasons that make D-Mart the ideal choice for customers in a market as price sensitive as India. The novel plan of action, innovative sales strategy, affordable pricing combined with the most appropriate form of marketing, positions D-Mart at the top of the list outshining all other one-stop-shops in India.

Written By- Tushna Choksey