๐ ๐๐ ๐ฎ๐ฟ๐ aka ๐๐๐ฒ๐ป๐๐ฒ ๐ฆ๐๐ฝ๐ฒ๐ฟ๐บ๐ฎ๐ฟ๐๐
Often regarded as the perfect blend of three global hypermarket leaders - Walmart, IKEA & Costco
Our analysis from an investor's p.o.v. โคต๏ธ
#business #Investment
Often regarded as the perfect blend of three global hypermarket leaders - Walmart, IKEA & Costco
Our analysis from an investor's p.o.v. โคต๏ธ
#business #Investment
Strengths of the industry:
โข Pretty underpenetrated (only 11% organised)
โข Robust growth (organised retail CAGR 20%)
โข More customer loyalty than online stores
โข More basket value than online stores
โข Pretty underpenetrated (only 11% organised)
โข Robust growth (organised retail CAGR 20%)
โข More customer loyalty than online stores
โข More basket value than online stores
Strengths like Walmart -
โข Efficiency in supply & operations brings good profits despite low prices
โข Low price -- more customers -- more sales -- more manufacturers -- low price (a loop)
โข High operational margins due to cluster approach (70% capex in existing mkt)
โข Efficiency in supply & operations brings good profits despite low prices
โข Low price -- more customers -- more sales -- more manufacturers -- low price (a loop)
โข High operational margins due to cluster approach (70% capex in existing mkt)
Strengths like Costco -
โข High inventory t/over as they keep those products in stock that sell
โข They pay their suppliers pretty fast and avail discounts
โข High inventory t/over as they keep those products in stock that sell
โข They pay their suppliers pretty fast and avail discounts
Strengths like IKEA -
โข Large areas stores for more customers, online sales catering & selling apparels, etc
โข Mostly self-owned stores help in lower debt & higher cashflows
โข Large areas stores for more customers, online sales catering & selling apparels, etc
โข Mostly self-owned stores help in lower debt & higher cashflows
Weaknesses & threats:
โข Less convenient than online
โข What Amazon did to Walmart, will Jio do to DMart, i.e. force DMart to spend on marketing & take a hit on its profits
โข If DMart's margins take a hit due to Jio, it might take a long time to recover
โข Stretched valuations
โข Less convenient than online
โข What Amazon did to Walmart, will Jio do to DMart, i.e. force DMart to spend on marketing & take a hit on its profits
โข If DMart's margins take a hit due to Jio, it might take a long time to recover
โข Stretched valuations
Our take:
As discussed above, DMart brings the operational efficiency of Walmart, the low SKU strategy of Costco & big store-strategy of IKEA.
However, it remains to be seen if DMart can still maintain these metrics in spite of further aggressive expansion by Jio.
As discussed above, DMart brings the operational efficiency of Walmart, the low SKU strategy of Costco & big store-strategy of IKEA.
However, it remains to be seen if DMart can still maintain these metrics in spite of further aggressive expansion by Jio.
Read an interesting article on the business model of DMart here: insider.finology.in
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