DMart must ramp up e-commerce network to compete with JioMart, BigBasket, Grofers, others

By: |
September 21, 2020 5:40 PM

As the coronavirus pandemic pushes customers towards online shopping, retail and consumer goods sellers have also ramped up online operations. For DMart, it has also become imperative to expand its e-commerce channels to more cities.

While DMart enjoyed a loyal consumer base due to product assortment and low prices, that changed during coronavirus.

As the coronavirus pandemic pushes customers towards online shopping, retail and consumer goods sellers have also ramped up online operations. For Radhakishan Damani-owned DMart, it has also become imperative to expand its e-commerce channels to more cities and compete with other players such as JioMart, BigBasket, Grofers and Amazon Fresh/Pantry etc. “DMart … needs to bring more cities under its e-commerce network in order to maintain revenue momentum. Competitive intensity would ensure that DMart’s margins may not expand significantly going forward,” a report by Kotak Institutional Equities said last week.

While DMart enjoyed a loyal consumer base due to product assortment and low prices, that changed during coronavirus. Customers were more likely to explore different buying options, including e-commerce, and at least a few of them may continue using that channel for a bulk of their e-commerce purchases. DMart itself is running its e-commerce channel only in Mumbai currently, and it must scale up that service fairly quickly if it intends to compete with the likes of Jiomart and others.

Trouble brews for DMart 

While Reliance Retail’s acquisition of Future Retail Ltd may not impact DMart’s business much as brick-and-mortar retail caters to a very hyperlocal set of customers, kirana digitization program being carried out by Reliance Retail, Amazon, and Flipkart may “eventually bring down kirana’s product acquisition cost and may make the local a grocer more competitive versus DMart,” the report said. Over time, this is likely to drive away some footfalls from DMart stores towards local stores.

Among its peers, DMart is the lowest priced retailer in nearly half of the product categories tracked by Kotak Institutional Equities in March 2020. Price competition is majorly driven by JioMart, BigBasket, Grofers and Amazon Fresh/Pantry and price competition among retailers is increasing. In September, DMart was the lowest priced retailer for only seven products out of the total 31 as competition intensity increased.

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