Radhakishan Damani: The visionary investor and retail maverick

Radhakishan Damani is a prominent businessman and investor, who forayed into the retail industry with Dmart, which has become a household name among Indian consumers since its first shop opened in 2002

Avenue supermarkets, one of the largest retail chains in India that operates Dmart, reportedly showed a profit of Rs. 505.21 crore for quarter ending March 2023. This was a quite growth compared to the last fiscal year, which showed profits of Rs. 466.35 crore. There was an increase of 8.3% from the last fiscal year. The revenue from the operations shot up 21.11 % with Rs. 10,337.12 crore in comparison to the last fiscal year. Dmart has also expanded its retail network and currently stands at 324 stores pan India.

Radhakishan Damani’s early life and career

Born into a Marwari family, Damani came from humble beginnings to his esteemed position as an entrepreneur today. He dropped out of his education at Mumbai University. His father already worked on Dalal Street. He got the ball rolling with investing after his father’s demise. His step into stock broking and trading. Damani procured huge profits through his journey in stock trading.

Damani built his wealth through strategic decision making and taking the right steps at the right time. His journey, which started from humble beginnings, serves as an inspiration for aspiring entrepreneurs. Damani’s career started with stock trading, and he gained recognition for identifying undervalued stocks and making successful investments. He started his stockbroking company, Bright Star, in 1989. He was registered by SEBI in 1992. He was the largest holder of HDFC Bank shares when it went public in 1995.

Damani, in alliance with Damodar Mall, took over a 5000 sq ft area, and in 2002, he set up his first retail store in Powai, Mumbai. This store was the initiation of the veteran investor into the retail industry. The inception of Avenue Supermart Ltd. was pivotal for the veteran investor. He actively grew his portfolio while also investing in various other companies.

Radhakishan Damani has had a long and illustrious run from Dalal Street to becoming an industry expert by investing and finally establishing himself as an entrepreneur in the retail business. According to the Economic Times, the Avenue Supermart founder, took inspiration from Chandrakant Sampat. Initially just observing what stocks people were dipping their toes into, Damani observed from the far end of trading circles the then elites in the trading circle. He also logged heads with Harshad Mehta. The Economic Times opines that at the time, the founder of Avenue Supermart was not expected to be counted in India’s top billionaires. The industry veteran proved his mettle by adopting a low-cost, everyday discount business model.

Business model of Dmart and the strategies that helped it become one of the leading supermarket chain in India.  

The business model of Dmart sets it apart from its competitors in its area of operation. Dmart follows the B2C model (business-to-consumer). It offers consumers a one stop retail experience, as they supply everyday items at lower prices than MRP. This method adopted by Dmart ensures that the demand for the goods remains constant throughout the year as everyday or household items are sold at discounted prices. This model helps them retain footfall in their Supermart across India.

Another important aspect that ensures Dmart’s success today is their attention to where the stores are located. Dmart tends to set up its stores around residential areas and does not rely on malls for their location. This helps them save their profits generated through operating retail stores. Dmart ensures that they match the goods in their stores according to the tastes and wants of the demographic in which their store is located. This helps them create strong and loyal customer relationships and helps spread their business name through word of mouth. Dmart generates profit through its low-cost, categorised model of conducting business. 

Dmart’s low priced goods attract many consumers to their stores. As previously mentioned, this low-cost model in terms of selling goods brings a large footfall into their business. Large footfalls increase sales margins. High sales margins attract more manufacturers to their businesses, who tend to lower the price on wholesale purchases. Dmart essentially creates a lot of profit by adopting this low-cost business model. Another front where we witness Avenue Supermart take a stronghold is in their stores, which are entirely in their own name. This ensures that they don’t have to allocate any capital towards rent in their cost of operations.

Dmart’s entire business model, heavily borrows from the operational aspects of Walmart overseas. This hypermarket chain is targeted towards a price sensitive demographic. The brands offered at Dmart are limited or not top brands compared to other retail chains. This is because they save costs by not taking in high brand manufactured goods to reduce their inventory turnover ratio.

Dmart, which started as one store, expanded to over 200 stores across India. Until 2016, Avenue Supermart held the company privately. In 2017, the shares were listed at 114%. At the time, in 2017, per share was listed at 299 rupees as listed at the BSE and NSE.

The veteran investor and entrepreneur, as reported by ET, is a habitual recluse. Radhakishan Damani became serious about shifting his focus into other streams of wealth after he quit stock market trading as his main profession. Today, his wealth is a combination of his trading and diversified portfolios and his valuation from owning Avenue Supermart Ltd. Forbes nominated Damani in 2023 at the 114 level with a net worth of $15.3 billion (about $47 per person in the US). Damani’s entrepreneurial vision and investment prowess have positioned him as a respected figure in the business world.

 

Disclaimer: The views expressed in this article are those of the author and do not necessarily reflect the views of ET Edge Insights, its management, or its members

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