DMart's New CEO May Have To Amp Up E-Commerce Game As Online Grocery Battle Heats Up

The newly designated CEO, Anshul Asawa, is expected to ramp up DMart's e-commerce playbook to steer growth as the company prepares for a new era. The rapid rise in demand for instant fulfillment, served by quick commerce players such as Zepto, Swiggy Instamart and Zomato's Blinkit is eating into margins, forcing the supermarket chain to redo its strategy — shutting DMart Ready's pick-up points to focus on home delivery.

"We are seeing significantly more demand for home delivery compared to pick-up point and hence we continue to align our business to that extent," DMart's outgoing CEO Ignatius Navil Noronha said in a statement. "In several towns we now only operate home delivery as a delivery channel." Although how quickly they are delivering the goods remains unclear.

For most FMCG companies, digital channels now comprise 10–12% of overall sales. But traditional retailers like DMart, operated by Avenue Supermarts Ltd., failed to jump on the e-commerce bandwagon. Its e-commerce vertical, DMart Ready, grew 21.5% in the first half of FY25 even as its pace of expansion has been very slow, with operations in only 25 cities after eight years. The model, which allowed customers to order online and pick up from the nearest point, struggled amid 10-minute delivery boom. The vertical accounts for less than 5% to overall sales.

Asawa will join as CEO-designate in March and formally take over from Ignatius Navil Noronha from February 2026, the Mumbai-based company said in a filing. Noronha, who chose not to renew his contract after a 20-year-stint, will continue as CEO in the interim.

Asawa is currently the country head of Unilever in Thailand and general manager for the home care business unit in Greater Asia. An IIT Roorkee and IIM Lucknow alumnus, Asawa brings three decades of experience from Unilever Plc., including 15 years with its Indian arm, Hindustan Unilever Ltd. Interestingly, both Noronha and Asawa share a background with HUL prior to their tenures at DMart.

During his tenure at HUL, Asawa led the digitisation efforts at the company and was also at the forefront of leading product innovations for homecare categories and sales & distribution transformations in urban and rural markets within the country. As a senior leader for foods and refreshment, he managed a complex sales and distribution system for UP, achieving record sales while driving competitive growth. He is known for his consumer-centricity, commercial discipline, and execution focus, according to DMart.

The leadership change comes at a time when DMart's competitive moat is being increasingly tested. For the quarter ended December, the Radhakishan Damani-founded company posted profit that missed estimates amid the stiff competition from online grocery players.

"DMart is facing increased intensity in discounting in the FMCG category and the consequent impact to high turnover per square feet stores in metro towns," the company said.

Moreover, the company's business model, which relies heavily on owning real estate for its stores, helps save costs on rent but naturally limits its expansion compared to new-age quick commerce players, who are rapidly scaling up presence. Only about 17% of India’s overall $500-billion grocery market is estimated to be within the company’s reach, according to Goldman Sachs. To maintain its pricing edge in response to heightened competition, the company has been compelled to ramp up discounting activities, with discounts on its FMCG products reaching up to 25% off the maximum retail price in December 2024.

These shifts have continued to hurt its margins. For the October-December quarter, its operating profit grew 10.2% over the year to Rs 1,235 crore, though the margin at 7.9% remains below pre-Covid levels. Ebitda growth has lagged revenue in the last nine out of 10 quarters. The gross margin came in at 14.1%, down 10 basis points over the last year due to customers cutting back on non-food products in favour of food and pricing action on the foods portfolio to tackle the rising quick commerce competition.

"We believe DMart’s margins would continue to be under pressure amid the high competition and management’s focus on market share followed by margins," said Abneesh Roy, executive director, Nuvama Institutional Equities.

DMart's revenue per square feet increased 3% over the previous year to Rs 39,035 on an annualised basis but it is still 2% lower than the pre-Covid figure of Rs 41,930 achieved in Q3 FY19, according to Nuvama.

From fiscal 2012 to 2020, DMart consistently posted same-store sales growth — a key metric of retailers' performance — above 10%. However, that growth has slowed as older stores matured.

As Asawa prepares to take over CEO, investors will be keenly watching for his strategy to re-invigorate the company, compete against online players while also expanding physical stores with a focus on improving margins.

DMart's apparel business also faces competition from offline peers, many of whom including Tata Group's Trent Ltd. are currently outpacing DMart in terms of margins and growth. The share of gross merchandise and apparel declined 6% versus FY19 or post covid to 22.4% in FY24. In the past six months, DMart's stock has fallen 26%, while Trent Ltd. has seen a growth of 16%.

"The market landscape, especially the post-quick commerce, has been evolving and cultural issues too may have been persisting with older hands balancing, which may have been challenging," according to Dolat Capital Market Pvt. analyst Himanshu Shah. "In this backdrop, the change of management is a welcome move. The academic and professional background of Asawa also looks promising." He however, warned that the company could face "short-term headwinds" due to the transition amid the current market dynamics.