Supermarkets: DMart's Rise and Big Bazaar's Fall

How India's supermarket chains grew, why DMart succeeded with a low-cost owned-store model while Future Group's Big Bazaar collapsed, and what separates winners from losers.

From the 2000s, supermarket and hypermarket chains spread across Indian cities. Their stories show what works in Indian retail.

Big Bazaar and Future Group

Future Group, led by Kishore Biyani, launched Big Bazaar in 2001, bringing hypermarket shopping to India with big discounts and sales like “Sabse Sasta Din”. It grew rapidly into many formats.

But Future Group expanded quickly, often using leased stores and borrowed money. When the pandemic hit in 2020, it faced a debt crisis. A deal to sell its retail business to Reliance was blocked in a legal battle with Amazon, which had invested in a Future Group company. Future Retail entered insolvency in 2022, and many Big Bazaar stores were taken over by Reliance.

DMart’s model

DMart, run by Avenue Supermarts and founded by Radhakishan Damani in 2002, took a different path:

Owning stores rather than leasing, avoiding rising rents.
Everyday low prices rather than frequent big sales.
Limited product range, focused on fast-moving goods.
Paying suppliers quickly, in return for better prices.
Slow, profitable expansion funded largely from profits.

DMart became one of India’s most profitable retailers, and its stock market listing in 2017 was hugely successful.

Reliance Retail

Reliance Retail grew into India’s largest retailer by revenue, across groceries, electronics, fashion and online through JioMart, using the Reliance group’s financial strength and acquisitions.

Lessons

Cost discipline and low debt matter in a thin-margin business.
Owning real estate can protect against rent increases.
Rapid expansion fuelled by debt is risky.
Focus on what customers value, such as low prices and convenience.

Two chains, one pandemic

When lockdowns hit in 2020, a chain with owned stores, little debt and fast-moving groceries weathered the shock. A chain with leased stores, high debt and more discretionary products struggled to pay rent and loans. The first survived; the second collapsed.

Thinking the biggest retailer is always the most profitable

Rapid growth without cost discipline can lead to collapse. DMart grew slowly but profitably.

Key takeaways

Big Bazaar, launched in 2001, pioneered hypermarkets but Future Retail entered insolvency in 2022.
DMart succeeded with owned stores, everyday low prices and cost discipline.
Reliance Retail became India's largest retailer.
Low debt and cost control are vital in thin-margin retail.