PORTER’s FIVE FORCES ANALYSIS
Threat of New Entrants (Strong
Threat)
• New entry of retail firms is
easily achieved even in the
presence of giants like Avenue
Supermarkets.
• Small retailers can enter the
market and compete on the
basis of convenience, location,
specialty, and other factors
• Low cost of doing business
(strong force)
• Moderate capital costs (strong
force)
• Moderate cost of brand
development (moderate force)
Threat of Substitutes (Weak Threat of Substitutes
Threat) (Weak Threat)
• Avenue Supermarkets offer a
• Avenue Supermarkets face the
wide variety of goods and some
weak intensity of the bargaining
services that have a few or no
power of buyers in the retail
substitutes. The following
industry environment. The large
external factors are the most
population of buyers makes it
significant, concerning the threat
difficult for them to impose
of substitution:
significant pressure on retail
• Considerable availability of
firms.
substitutes (moderate force)
• The bargaining power of buyers
• Low variety of substitutes (weak
is weak in influencing Avenue
force)
Supermarkets and other retail
• Higher cost of substitutes (weak
firms.
force)
• Some substitutes are more
expensive than the low-cost
goods available at Avenue
Supermarkets
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PORTER’s FIVE FORCES ANALYSIS
Bargaining Power of Suppliers
(Weak)
• The bargaining power of
suppliers has weak intensity in
the retail industry environment.
There are many suppliers in the
retail industry. Large firms like
Avenue Supermarkets can easily
affect these suppliers
• Large population of suppliers
(strong force)
• Tough competition among
suppliers (weak force)
• High availability of supply (weak
force)
• High availability of supply makes
it difficult for suppliers to impact
retail firms.
Intensity of Competitive Rivalry
(Strong)
• The intensity of competitive rivalry
is strong in this industry. There are
many firms of different sizes
competing in this industry
environment. Currently, the main
competitor are Reliance Fresh,
Spencers, Future Retail, Big
Bazar, More etc
• Large number of firms in the retail
market (strong force)
• Large variety of retail firms (strong
force)
• High aggressiveness of retail firms
(strong force)
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• Best in class • Key management • Huge opportunity for • Pricing aggression
operational efficiency personnel risk and growth in new states from
compared to peers promoter risk apart from web only players.
• Relationship with • Asset heavy model Maharashtra and • Failure to identifying
suppliers and logistics for expansion Gujarat and buying key
provider • Rapid expansion is • To capitalize on online properties.
• Strong execution difficult since opportunity through D- • Sharp increase in real
capability in largely Mart Ready stores estate prices.
identifying locations follows ownership • Scope to increase • Hyper-Inflationary
for store opening model centralized sourcing situation impacting
• To increase share of food and grocery
private label brands
 Strengths Weakness

• Best in class operational efficiency
compared to peers
• Relationship with
suppliers and logistics provider
• Strong execution capability in
identifying locations for store opening
D-Mart’s • Key management personnel risk and
promoter risk
Resources • Asset heavy model for expansion
• Rapid expansion is difficult since
largely follows ownership model

Tangible Resources Intangible Resources Human Resource

- Owned Stores Model - Brand recognition due to
- 21 days Cash Conversion its long presence in the
Cycle. markets
- 80% Financing through - Increasing centralized
Equity. sourcing adding to
efficiency
DMART follows a dual system for
its manpower requirement :
1) Key employees on payroll and
2) Job roles where attrition
is high are made on contract basis
 Better pricing to consumers, Faster Payments to
Suppliers

Value Rare
• Cluster-based approach towards store • Strategically chosen regions and

•
•
expansion
Rich product assortment
Owned store model
V R premium locations provides it a deep
penetration into the retail market of
small cities and towns. A resource not
• Centralized sourcing and efficiency present with its rivals.

Inimitable and Non-

Exploitable
E I-N substitutable
• Lower cost with better locations than
• D-Mart has the potential to earn higher competitors
profits for extended period of time until
imitated and exploited by competitors • Superior access to inputs
• Price based loyalty, Long term
reputation.
 BUSINESS LEVEL STARTEGY – AVENUE SUPERMART (D-
MART)

• Mission: To be the lowest priced retailer in the area of operation/city/region

• The business strategy for D-Mart involves setting up an image of a discount store which can help them to
attract more customers towards them
• D-Mart follows the strategy of EDLP(Every Day Low Pricing) by offering 6%-12% discount on food items
and groceries or even 10% on some products.
• It’s strategy is markedly different from it competitors like Reliance and Future Group. While other
companies have quickly expanded into multiple segments, D-Mart kept its sales mix limited to food and
groceries.
• The quick inventory turnover ratio allows the retailer to negotiate for better prices for itself, as it pays its
suppliers early. It then offers these low prices to its consumers.
• Unlike most retail firms which are burdened by the high cost of rentals, 90% of D-Mart stores are located
in properties owned by the firm.
 NUCLEUS OF THE BUSINESS LEVEL STARTEGY
Customer
•D-Mart focusses on catering to
value-seeking retail customers,
largely from the lower-middle,
middle and aspiring upper-middle
income segments
•The business level strategy only
focusses on how much a customer
can save and become a market
leader in that
•Paying attention to meet the
customer needs in the most
economical way helps D-Mart to
get promoted through Word-of-
Mouth marketing
Employees
•In order to adopt the culture of self
service with service-oriented format
in our country, business strategy for
D-Mart focusses on building a
cadre of simple, hardworking store
people who ensure fully stocked
shelve, clean price communication,
efficient checkout and not much
beyond in customer service
•Since all the hardware and
connectivity is best in class hence
skilled manpower is not required by
D-Mart to boost the sales
•Live its Self-Service Dream
diligently
Vendor
•D-Mart involves a strategy which
inculcates the provision of faster
payment to suppliers specially
small traders who are always short
on capital and perpetually stressed
about their working capital situation
•D-Mart decided to be a market
beater by paying faster than market
norms to its vendor.
•They quickly became best pay
master in town
•In spite of being tough negotiators,
vendors do many small things to
ensure that D-mart gets the best
availability and deal for its products
 ADAVANTAGES OF BUSINESS STRATEGY

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 DISADVANTAGES OF BUSINESS STARTEGY

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VALUE CHAIN ANALYSIS
PRIMARY ACTIVITIES
▪ Inbound ▪

logistics
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▪ Operations
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▪ Outbound
▪
Logistics
▪ Marketing & •
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sales
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▪ Service •

SUPPORT ACTIVITIES
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▪ Procurement •
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▪Technology
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Development
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▪ HRM
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▪ Firm
Infrastructure •
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