R K Damani, one of the biggest stock market investors, plans to double D’Mart stores in the next one year, according to sources in the know.
Currently, the food and grocery retail chain has 19 stores in Maharashtra and Gujarat and new stores would come up in cities such as Mumbai, Baroda, Surat and Ahmedabad, for which the company has already booked properties, sources added. The company has plans to go national in the next couple of years depending on the market conditions.
“We are looking to grow aggressively in the next one year and booked all our properties. It all depends on real estate availability now,” said a top company official. Unlike the majority of the organised retail chains, D’Mart does outright purchase of properties. “We do not believe in leasing our stores. We are looking at long-term opportunities,” an official said.
Analysts believe that buying own properties is a good strategy for long-term prospects. “Property appreciation helps in the long run. Even if anyone want to sell 10 to 20 per cent of the stores, the inflows will help them open many more stores,” said Susil Dungarwal, a Mumbai-based retail analyst.
The company has a mix of hypermarkets of 30,000 square feet in Mumbai and Pune and supermarkets of 15,000 sq ft to 16,000 sq ft in other cities. “We are watching the market conditions carefully and are being choosy about opening stores and locations. We do not want to open hundreds of stores across the country like the big retailers, but give quality products at good prices,” the official said.
Dungarwal agreed saying, “Rather than opening five stores in five cities, it is better to have 50 stores in one city if you want to make profit and achieve better efficiencies,” he said.
The organised retail sector, which accounts for around 5 per cent of the estimated $350-billion domestic retail market, is expected to increase its share to 14-18 per cent of the total market by 2015, says a McKinsey report. The Tatas, Birlas, Reliance Industries and Videocon have entered organised retailing seeing enormous opportunities in the sector.