Dmart recasts strategy as rapid delivery competition intensifies

Avenue Supermarts Ltd. overhauled its e-commerce strategy by shutting operations in several cities that didn’t contribute much to the group’s results, a sign of the growing competition facing India’s rapid delivery platforms.
“During the quarter, we have discontinued our operations in seven cities which were marginal contributors,” Vikram Dasu, chief executive officer for its DMart Ready e-commerce business said in a press release Saturday when it reported underwhelming quarterly earnings. Dasu said DMart is focusing instead on the larger metropolitan areas.

After the closures, the retailer now operates its online delivery business in 11 cities, he said.


The reworking of DMart’s business model comes as competition in the rapid deliveries sector intensifies with retail giant Amazon. com Inc. and Walmart Inc.’s Flipkart continuing to invest heavily in a sector that’s so far dominated by Eternal Ltd., Zepto Ltd. and Swiggy Ltd.

Read More: Amazon’s India Push Into Rapid Deliveries Scalds Eternal, Swiggy

“We see rising and persistent competitive intensity for years, not quarters, from multiple dimensions,” Macquarie analysts Aditya Suresh and Baiju Joshi wrote in a May report.

DMart’s reported first-quarter net income of 9.3 billion rupees ($98 million), missing estimates, with revenue of 183.43 billion rupees. The value grocery chain had flat growth for its older supermarket stores in large metros during the quarter, Chief Executive Officer Anshul Asawa said, adding that stores in non-metro areas “continue to grow well.”

The retailer has abstained from entering the 10-minute delivery segment, instead choosing to ship groceries within a few hours via its DMart Ready platform. The company is known for its big box format of supermarket stores with cut-rate pricing.

DMart opened three new stores during the quarter, taking the total store count to 503, according to Asawa.