DMart prioritises store expansion to drive long-term cash flow, as JioMart and Blinkit lead weekly active user growth: Report

New Delhi [India]December 27 (ANI): Indian retail giant DMart is prioritizing long-term growth through a massive store expansion strategy that is expected to delay its ability to generate significant cash in the short term, according to a CLSA India Weekender – ALL THINGS INDIA report.

The report stated that DMart is in an aggressive growth phase with plans to grow 15-20 percent annually. This strategy is common for large retailers in the early years of expansion. “Historically, free cash flow has been negative in the early years of expansion due to rapid store additions,” the study notes.

The retailer’s management can currently view 2,200 stores. Given the high volume of upcoming projects, the company’s short-term free cash flow is likely to remain negative or minimal. But global examples like Walmart and Costco show that as store expansion slows and becomes routine, a company’s cash balance begins to turn significantly positive.

DMart is expanding its private label brands to compete with other players. These products are sold at 40-50 percent cheaper than famous brands, sometimes even at a third of the price. Although many people are starting to use flash commerce apps for fast deliveries, CLSA expects these services to account for less than 20 percent of urban consumption by 2035. This creates significant demand that brick-and-mortar stores like DMart can meet.

The report tracks weekly usage of shopping apps in the digital space. In the week ending December 8, JioMart saw the highest increase in weekly active users, followed by delivery app Blinkit. While most major e-commerce players saw a decline in users that week, the Meesho app increased its user base to 169.8 million.

The report also draws attention to competition in food and grocery delivery. While Zomato and Swiggy remain the main competitors in food delivery, Blinkit, Zepto and Swiggy Instamart compete in the express commerce category. Despite this digital growth, traditional retailers like DMart continue to focus on expanding their physical presence to secure future profits. (MOMENT)