Avenue Supermarts to expand stores, focus on north and smaller cities

DMart operator plans faster store rollout with focus on north India and Tier-II cities, eyes 20% expansion and long-term potential of up to 1,900 outlets

Avenue Supermarts, which operates the DMart supermarket and hypermarket chain, is set to accelerate store expansion, with a sharper focus on the northern region.

 

The retailer also aims to grow in smaller cities, which offer better return on investment (ROI) at lower capital costs, the company’s management told analysts during a conference call on Wednesday.

 

Current chief executive officer Neville Noronha will personally oversee the north India expansion for six months until his term ends in January.

 

However, the management noted that rising real estate prices across regions pose a challenge in identifying viable new locations. The company expects this trend to continue.

 

 

To support its expansion drive, Avenue Supermarts is likely to consider raising funds through debt. It is targeting a 20 per cent increase in store count and sees a long-term opportunity to scale to around 1,800–1,900 outlets.

 

The company does not intend to enter the quick commerce space. Its immediate priority will be scaling operations rather than focusing on profitability, the management said.

 

Through DMart Ready, its e-commerce platform, the company aims to maintain healthy double-digit sales growth by focusing on value and reducing delivery time to under six hours.

 

The company said it has gained market share through its physical stores, particularly in metro areas. However, it does not plan to expand DMart Ready to new cities for now and will instead focus on increasing penetration in existing markets.

 

Demand in the apparel segment remains soft due to rising competition from affordable retail chains, the management added.

 

In its post-call report on the company, PL Capital stated: “D-Mart’s annual analyst call reinforced our cautious stance due to rising land acquisition costs, increasing wage inflation and a deteriorating product mix, which can further pressurise margins in the near to medium term.”

 

The report also pointed to structural challenges in the apparel segment, stiff competition from quick commerce players—especially in the top 20 cities—and limited visibility on DMart Ready’s path to profitability.