D-Mart Vs Future Group : Observations

As the saying goes, You can tell a man’s character by looking at his shoes”, one can also spot the character of a business by the commentaries and the interviews, management of businesses provide.

There were a couple of observations which really stuck out, especially when I started to compare the commentaries between Future Group and D-Mart over the last week, and hence thought of presenting the same below:

Projections Vs Patience


  • “We don’t give any projections. We will never get extremely aggressive in our store expansion in new states. There is no compulsion to do super growth. We will grow at the pace we think suits us.” – Navil Noronha, CEO – D-Mart
  • “You guys just need to scale this up, but carefully, no shortcuts” – Radhakishan Damani, Promoter – D-Mart); words of wisdom to the D-Mart team

In 2006, when D-Mart was just a 7-store operation, it implemented its first enterprise resource planning (ERP) platform. Investment in an ERP platform and distribution centre allowed the company to have a far more efficient supply chain than competition, who did the same only when they achieved scale.

This obviously follows the fabled adage: Slow and steady wins the race. In a retail business, where winning is obviously centred towards details, it is important to grow steadily but profitably.

Future Group:

  • “Our plan is to add 1,000 small stores over the next 12-15 months. Our plan is to open up another 35-40 Big Bazaars, our plan is open another 50-60 Brand Factories.” – Kishore Biyani, promoter of Future Group. (Just a couple of years ago in 2012, Future Group had sold its debt-laden Pantaloons retail chain to Aditya Birla Nuvo Ltd.). Would history rhyme again?

it’s important to know your risks. After all, even a very large number multiplied by zero eventually will become worthless.

Humility & Understanding Circle of Competence


  • “Adoring investors’ as a topic is very new to me” – Navil Noronha, CEO – D-Mart
  • We are just feeling our feet in the eco-system, E-commerce is our limitation; we understand very little here. We are trying to understand this. – Navil Noronha, CEO – D-Mart

After all, acknowledgement of one’s faults / shortcomings is something which you don’t see coming, generally from the management. After all, as Warrant Buffett has said, “You don’t have to be an expert on every company, or every aspect of the business (if you are learning)* or even many. You only have to be able to evaluate companies within your circle of competence. The size of that circle is not very important; knowing its boundaries, however, is vital.”

*Emphasis – Mine

“I’m no genius. I’m smart in spots-but I stay around those spots.” –  Tom Watson Sr. Founder of IBM

Future Group:

  • “It’s stupid to be in the online space.” – Kishore Biyani, Promoter – Future Group. According to some reports, Future Group witnessed a loss of around INR 250 Cr on FutureBazaar.com, Big Bazaar Direct, and Fab Furnish.
  • “Fruits and vegetables are a great way to get customers frequently. They are daily products. We want the first mover advantage,” said Vinay Bhatia, CEO – Group Loyalty & Analytics, Future Group.

While both are contradictory, it is important to learn from your follies, rather than repeating the same mistake again, after all:

Don’t throw good money after bad

Costs Vs Time Duration Matter

  • “Owning a store is far riskier, but we like to do it more because we understand that space.” – Navil Noronha, CEO – D-Mart

D-Mart’s management is always cautious while buying property. They have not spent more than INR 5,000 million to date (both in property and technology) and they have a competitive edge when it comes to sourcing the best locations. This enables them far greater flexibility in store lay-out and the percentage mix of various products.

  • “We are one of the largest rent payers in the country with Rs 2,200 cr rents per year. – Kishore Biyani, Promoter – Future Group.

With such a large recurring fixed expenditure, it is important to keep increasing the revenue, thereby leading to immense pressure every day. While renting allows to expand faster, it however, also creates a short-term view to some extent, since it is always susceptible to leave the location if the store is not performing in accordance with the expectations.

While the following wise words from Jeff Bezos is one of my favourites, when it comes to thinking for the long term: “If everything you do needs to work on a three-year time horizon, then you’re competing against a lot of people, but if you’re willing to invest on a seven-year time horizon, you’re now competing against a fraction of those people, because very few companies are willing to do that.

Just by lengthening the time horizon, you can engage in endeavours that you could never otherwise pursue.

At Amazon we like things to work in five to seven years. We’re willing to plant seeds, let them grow – and we’re very stubborn.”

While the retail play in India has become interesting. With the advent of online retailers already making their presence felt, to some of the largest B2B businesses trying to become retail centric, it will not be easy to spot winners from the hay. After all, When the Facts Change, I would change My Mind. What would you Do, Sir?

Disclaimer: Please note that these are my personal views. While, I am a registered Research Analyst as per SEBI (Research Analyst) Regulations, 2014, all investors are advised to conduct their own independent research into individual stocks or industries before making any decision. In addition, investors are advised that past stock performance is not indicative of future price action. 

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