Topline expansion will come once they expand to more geographies. The grocery market in India is big enough for multiple large companies to exist.
Margin expansion will come when they start leveraging this scale to put pressure on manufacturers (similar to how Walmart dominates manufacturers in the USA). In India, FMCG companies still prioritize GT over MT, as they excercise greater control over their own distributors. Once MT becomes too big, FMCG will have to start giving higher preference to MT. This preference will be in terms of better margins, more access to KVI pack sizes (this is key here. Currently, FMCG companies restrict the KVI allocation to MT companies) and pricing restrictions( FMCG companies do not allow MT to sell below a certain price as it disrupt their GT channel). Currently, FMCG companies use MT channel to sell their non KVI SKUs and for new product launches primarily. Once this begins to change, companies like DMart will grow exponentially.
Disc: Invested
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