How is Retail Giant, DMart Winning over Quick Commerce?

DMart's brick-and-mortar business model is facing pressure from the rapid growth of quick commerce, particularly in urban areas, but it's not necessarily losing the battle. While quick commerce offers convenience and speed, DMart's strengths lie in its value proposition, low prices, and extensive retail network, which cater to a different consumer segment. DMart is also adapting by expanding its online presence with its DMart Ready platform and exploring strategic partnerships.

How DMart's Sustainability Wins over Quick Commerce's Speed?

The quick commerce revolution has transformed how Indians shop, with platforms like Swiggy Instamart, Zepto, and Blinkit promising deliveries in just 10 minutes.

On the surface, the sector looks like a success story with:

📈 Revenue increasing from $100 million in 2020 to $6 billion in 2024

Quick commerce is losing billions trying to deliver in 10 minutes, while DMart, worth ₹2.47 trillion, is building lasting wealth.

DMart vs Quick Commerce

But despite the growth, Quick Commerce faces losses like:

📉 In Q3-FY25 (Dec-24), Swiggy's consolidated net loss widened to ₹799 crore (~$95 Mn), up from ₹574 crore ($68 Mn) (Dec-23)

📉 In Q4-FY25 (Mar-25), Zomato's quick commerce arm, Blinkit, reported an adjusted EBITDA loss of ₹178 crore ($21.1 Mn), a significant increase from ₹103 crore ($12.2 Mn) in Q3 FY 2025 (Dec-24), despite increasing order volumes.

Meanwhile, traditional retail giant DMart - Avenue Supermarts Ltd reported a profit after tax of ₹2,927.2 crore ($352.5 Mn), an 8.6% increase over the ₹2,694.92 crore ($320 Mn) recorded in FY 2024-25. EBITDA rose to ₹4,543 crore (~$539 Mn)from ₹4,099 crore ($486.2 Mn). However, EBITDA margin narrowed to 7.9% from 8.3%, highlighting cost pressures.

DMart follows a strategy different than the 10-minute delivery model. Their strategy emphasizes on:

1. Store Ownership - Measured Expansion

DMart has a strong presence in India, particularly in tier-2 and 3 cities, where quick commerce penetration is lower. It owns most of its stores, resulting in rental expenses of less than 0.2% of its revenue. In contrast, typical retailers incur rental costs amounting to 4-6% of their revenues. ​It ensures each store is profitable before scaling further, which has led to an expansion of 415 stores across 12 states, as of March 31, 2025.

2. Value-driven Competitive Pricing

DMart's focus on everyday low prices and discounts attracts a large customer base, especially those seeking affordability. Implementing an "Everyday Low Pricing" strategy, DMart offers products consistently 6-7% cheaper than many offline retailers whicih attracts many middle class consumers.

3. Efficient Operations

DMart's lean operational model and efficient supply chain contribute to its low-cost structure.

4. Online Adaptation

DMart is launching its own online grocery platform, DMart Ready, and exploring partnerships with quick commerce players to cater to the convenience-seeking segment.

While quick commerce poses a significant challenge to DMart's traditional business model, the latter's strengths in value, extensive retail network, and ongoing adaptation efforts provide it with a good foundation to compete and even thrive in the evolving retail landscape.

This difference makes me question the long-term viability of quick commerce models, as they are essentially purchasing customers through investor capital. However, DMart proves that patient growth focusing on unit economics can create lasting shareholder value without promising impossibly fast deliveries. For investors and business leaders, the lesson is clear: Build businesses that generate sustainable profits, not just impressive growth metrics.

DMart vs. Quick Commerce: Why Brick-and-Mortar is Winning in Small Towns?

1. Cost Efficiency and Pricing Strategy

a. DMart’s Model: Leverages economies of scale, owned real estate (reducing rental costs), and a streamlined supply chain to offer everyday low prices (EDLP).

b. Quick Commerce: Struggles with higher operational costs (e.g., hyper-local delivery networks, dark stores), leading to inflated prices or thin margins, which are less appealing in price-sensitive small towns.

2. Customer Behavior and Preferences

a. In-Person Experience: Small-town shoppers prioritize tactile engagement (touch-and-feel) and social shopping experiences.

b. Trust in Cash Transactions: Reliance on cash over digital payments, coupled with skepticism toward online platforms, favors physical stores.

c. Demographics: Older populations and lower digital literacy reduce app adoption for quick commerce.

3. Infrastructure and Logistics

a. Low Population Density: Challenges quick commerce’s reliance on dense urban clusters for efficient delivery, increasing costs and delivery times.

b. Supply Chain Robustness: DMart’s centralized inventory and bulk procurement reduce costs, while quick commerce faces hurdles in maintaining localized stock in scattered small towns.

4. Cultural and Social Factors

a. Community Hubs: Brick-and-mortar stores double as social spaces, aligning with small-town lifestyles.

b. One-Stop Shopping: DMart’s wide product range (groceries, appliances, apparel) caters to preferences for consolidated shopping trips.

5. Economic Sustainability

a. Profitability: DMart’s asset-heavy model ensures long-term stability, whereas quick commerce’s high burn rate (fueled by discounts and delivery costs) struggles in low-volume markets.

b. Market Penetration: Quick commerce thrives in urban areas with urgent demand for convenience, a need less pronounced in small towns.

6. Technology and Adoption Barriers

a. Digital Divide: Limited smartphone penetration and internet reliability hinder app-based service adoption.

b. Returns and Customer Service: Physical stores simplify returns and support, crucial in areas with underdeveloped logistics.

Conclusion

Brick-and-mortar retailers like DMart dominate small towns due to cost-effective pricing, alignment with cultural norms, and infrastructure advantages. Quick commerce, while successful in urban centers, faces scalability issues in smaller markets due to logistical, economic, and behavioral barriers.

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