Opinion · Retail
Why DMart’s thinner margins signal trouble for pure value plays
Wage inflation and store adds are compressing the edge that once defined everyday low price retail across India.
The Desk, Editorial··4 min read
Avenue Supermarts posted ₹19,644 crore revenue and ₹743 crore profit for Q2, but the gap between top and bottom line widened. Ebitda margin eased and net margin fell to 3.8%. The 518-store network keeps expanding while costs rise.
On the shop floor a checkout supervisor now manages higher footfall yet sees less contribution per bill after the wage reset. That same pressure hits every value operator trying to staff new square footage without lifting MRP.
Entry-level wage inflation had led to a marginal increase in operating expenses, even as it remained committed to its value-for-money pricing strategy.
Rivals from Zudio to local kirana clusters feel the squeeze differently: Zudio’s own-brand speed absorbs some cost, while neighbourhood stores lose volume without the scale to renegotiate supply. Private-label vendors gain leverage only if they can feed the big chains cheaper.
The next test is festive same-store growth and the full-year store guidance. If margins stay soft into the December quarter, expect more selective expansion and sharper private-label pushes across the board.