The encyclopedia · Strategy & Leadership · Strategic decision · 2002-2026
DMart bought its stores' land so it could sell at everyday-low prices
DMart's ownership-led real estate model keeps occupancy cost low, funding an everyday-low-price promise that analysts compare to Walmart.
Avenue Supermarts (DMart)
the move
DMart's promise is everyday low price. The reason it can keep that promise is not just buying well — it is owning the real estate the store sits on.
Avenue Supermarts has, since its first store in Mumbai in 2002, followed an ownership-led model: it acquires land, develops the property to its own regulatory and operational requirements, and staffs it to run the DMart way. That converts rent, which rises every year, into a fixed asset.
Analysts compare the result to Walmart, which owns about 85% of its US stores, and read the same mechanism in DMart: lower long-term occupancy cost funds lower prices. DMart's store count grew from 284 in FY22 to about 503 by 2026, slower than a pure franchise would expand but with each unit carrying the durable cost advantage.
why it works
- Owned stores replace a rising annual rent with a sunk capital cost, so per-unit operating cost stays flat.
- A fixed occupancy cost is what makes everyday low price something the business can sustain without promotions.
- Developing the store to its own spec means the layout matches how DMart actually operates, not a landlord's generic box.
- The model also lets DMart out-negotiate landlords in the long run; it only leases where owning is genuinely hard (as in NCR).
what transfers
A low-price strategy is only as durable as its cost base. Fix the biggest recurring cost structurally (own it) and the everyday-low-price promise becomes sustainable rather than promotional.
what came after
DMart's ownership-led approach held as it scaled, but land acquisition became the constraint on growth, and its management said it would lease where it cannot buy suitable land (notably in NCR). By 2026, 68 stores were already on lease out of about 503, a pragmatic compromise that keeps the low-cost engine intact without surrendering it everywhere.
references
- What makes DMart Wal-Mart of India? Must you buy at 140 PE?
- DMart says land acquisition remains a challenge, keeps leasing option open, flags NCR
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