CPG companies or digital commerce companies would answer that better.
To my mind, except a few specific areas, there is value retailing embedded in quite a lot of large format retail and digital commerce.
How would you assess yourself on your pace of growth in - store expansion and sales per store over the last 4 years?
I think digital commerce is showing the way.
Adding new stores for our business and looking for moats in the E-Commerce business & growing it.
What according to you in post-pandemic India have been some of the structural changes in the Modern Retail Industry?
Quick commerce that could have huge scale and digitally enabled micro enterprises which can reach their small tiny audiences at very low costs and also a resurgence of differentiated / unique touch & feel retail / QSR / Cafes.
What has been your understanding of consumer sentiment lately? How has consumer behavior evolved across categories as per your reading?
Customers in India don’t pay a premium for a better shopping experience; hence retail is tough to become profitable. Especially if the same product is available cheaper some place else. This has remained unchanged so far. We spend more time looking for ideas and things that do not change and remain consistent for a very long time. I really don’t have an answer on consumer behavior evolution. CPG companies or digital commerce companies would answer that better.
“India will probably see more value retailers than the rest of the world.” you’d said when we last spoke. How has the emergence of new value retailers in select categories impacted your sales mix?
Impact to us is marginal and specific to a certain category such as apparel. This is because the market is extremely large. To my mind, except a few specific areas, there is value retailing embedded in quite a lot of large format retail and digital commerce. This will only get larger.
How would you assess yourself on your pace of growth in - store expansion and sales per store over the last 4 years?
Sales per store is fine. External world is tracking how many more stores DMart is adding every year. We worry about how well the new stores added are being managed. I think that’s the only delta in priorities. However, having said that, we have to add as many stores as possible and as fast as is possible. .
On your vendors, you’d earlier said “We probably need them more than they need us.” With a diverse set of aggressive buyers coming from, a large retail entrant, quick commerce players and others, how do you maintain your positioning with them?
Always be among the top 5 retailers of the country and you will be fine. Also, a country of this size has to be served by a significantly larger set of large retailers. Look at USA, UK, Germany, France, etc. Several retail chains and formats are needed to serve a diverse set of needs of large population countries.
Is the availability of sufficient real estate supply a growth impediment in the medium term? How has your philosophy on renting v/s owning evolved over the years now?
Good question. I think digital commerce is showing the way. It’s quite clear what we cannot do fast, they can. But I think Quick commerce is a significantly smarter format than digital platforms. More relevant for India.
Joe Coulombe, the founder of Trader Joes’, said – Where there is no competition today, there will be one tomorrow. What according to you is DMart’s edge? Where are the opportunities?
I can’t define the edge. Its very fluid.
“Dmart would love to have many equal sized, or multiple larger sized retail companies operating alongside. No fun in a race for anybody if you are the only one running.” What about current competition are you enjoying the most? What have your learnings from them been?
It’s a funny feeling. Reduced organized competition in the brick and mortar space has not in any ways benefitted us. There is always something new that is deployed at lightening speed. Digital ecommerce is the next big challenge for us all. Either market place or quick commerce. While we will be able to compete, it is the sudden disruption of General Trade that needs to be keenly watched. It would also need a reset in thinking for CPG companies. This sudden change of channel contribution would have significantly larger ramifications. Not just on pricing but on range and assortment too.
How do you view Private label, you’ve earlier stated it’s not high on your list of priorities, what categories in private label do you see value from a DMART standpoint?
A lot is written. I remain steadfast in my comments. We need to wait. .
What are you doing to improve your sales mix back to pre-pandemic levels?
We don’t think in this manner. Our mix reflects how our customer thinks about us now. Retail is detail but retail is also speed. You learn from the past, but work here is like running on the treadmill that has multiple variations to gradient and speed,… unannounced. One has to be watchful all the time. We make mistakes, we learn and we move on. Reflection and learning are critical to be relevant in retail.
You recently started a small Pharma Retail arm. What are the parameters that DMart uses to decide on an assortment category to keep in stores?
Principles of retail remain same. Revenue, Inventory turns, Asset turns, Gross Margins, Opex, Pilferage, Write-offs, Depreciation, Net margin, ROI. If you are making money, it means you are solving something meaningful for the customer.
Thoughts on growth in India moving on from metros and into Tier 2 and beyond, how does Dmart view this opportunity? Expansion plans?
A dense and large population country gives immense opportunity to any business where the addressable market is technically every single person. It’s a multi decadal expansion opportunity.
Over 5 years of limited, yet growing, presence in ecommerce – what have your learnings been? How do you see yourself in this space going ahead?
Like so many other things, India is jumping/skipping stages of evolution in retail. In a way similar to what happened in China. There will be significantly more digital before modern trade evolves and matures. Huge migration to large towns, more density and vertical development of real estate will make it harder and harder for brick and mortar retail to expand. I also believe that moats of every business no matter how strong, will be slightly weaker than pre-digital times. Entry barriers reduce for most if not all retail businesses. That could reduce profit pools for retail. There is no room for excesses.
What’s your experience on hiring been? What is DMart’s HR philosophy? What are you best in class on when it comes to attracting talent?
Nothing more beautiful and fascinating than having talent who started at a young age in their early 20s, stacking products on shelves or maintaining store hygiene or checking out customers and now maturing to be a leader managing hundreds or thousands of people or rupee crores of revenue. We have numerous such leaders. If you ask me what is the single biggest contribution we have done through the business we have built, it is this. Inclusive growth is permanent.
As the leader of an organization, what do you spend the most amount of your time doing? How is it divided b/w near term objectives and long term vision?
There is no profound insight in my response here. I think the difference or the edge lies in the environmental context and the specific knowledge of the team. It is difficult to explain. We are all outcomes of the timing and the alignment of our skills versus what is needed at that specific time. It’s no big deal.
Do you still operate on “limited data points” as alluded to earlier? How has D-Mart’s usage of data-analytics to optimize operations business been?
Data for vanity is strongly discouraged. Meetings need to be short, quick and effective. A 2-pager word document is preferred to a 10-slide presentation.
Digital, Big Data, Machine Learning, Artificial Intelligence, Automation are interesting topics. They are very disruptive to incumbents. All I can say is that business life cycle are shortening, significantly shortening and hence one has to have an eye on the ball all the time.” You’d said 5 years ago, where are you keeping your eye now?
Adding new stores for our business and looking for moats in the E-Commerce business & growing it.
How does Neville Noronha travel, when on a holiday? What trends do you observe? What podcast are you currently listening to?
