
‘Everyone frets over e-commerce too much. We do not’: DMart’s outgoing CEO Neville Noronha
Summary
- As DMart prepares for a new chapter with Anshul Asawa at the helm, outgoing CEO Neville Noronha reflects on his tenure, the evolving retail landscape, the strength of brick-and-mortar operations, and e-commerce hurdles.
Bengaluru: Over two decades ago, Avenue Supermarts Ltd’s founder Radhakishan Damani hired Neville Noronha from Hindustan Unilever Ltd and made him the head of operations at DMart in 2004. Noronha eventually took over as the chief executive of DMart in February 2007. He took DMart public in 2017 and made the retailer the country’s largest by revenue and market capitalisation.
On Saturday, DMart announced that Unilever veteran Anshul Asawa would succeed Noronha on 1 February 2026. This leadership change comes at a time when DMart faces challenges from quick-commerce and other organised retail players, including Tata Group’s Trent Ltd.
Below are Noronha’s email responses to Mint’s questionnaire (The email interview has been edited for clarity).
Why have you decided to leave DMart next year? How should investors look at this leadership transition, coming at a time when DMart is still trying to develop the right strategy in the e-commerce space?
Of the many reasons to leave, one is that 22 years tenure is a reasonably long one and the company is in good shape, with a good depth of leadership across the entire firm. The board has carved out parts of the whole business which can be handed over easily to the new MD and CEO, and parts that will require my time as they will take time to understand.
I have discussed with the board and Anshul on the best way to ensure this transition is smooth and Anshul spends as much time as possible on the retail side of the business while I will stay on and help the board and Anshul more actively on the non-retail side of the business.
I will not be completely cut off after a year. I am available depending on how the board and Anshul would like me to assist them on the many parts of the business, especially the non-retail side like real estate acquisition, project development and management, staples procurement and processing, e-commerce (on the board of which I continue to be). These are the more complicated pieces, which are unrelated to the main retail business. These are also extremely entrepreneurial, harder, and take longer to understand.
On e-commerce, I think everyone frets over it too much. We do not. We want to be of meaningful size in the grocery brick-and-mortar value-retail market. We strongly believe this market isn’t going anywhere. It’s an extremely large market opportunity and continues to grow.
We also humbly accept that we cannot be at the cutting edge of every segment of the consumer basket from a channel perspective. We just want to be a meaningful operator in the value segment of brick-and-mortar retail. Nonetheless, the DMart Ready team has done a phenomenal job within the ethos of the DMart value system. (DMart Ready allows customers to order online and collect groceries from a pick-up point.)
How many DMart Ready stores were operational as on 31 December 2024?
I think over time this number is going to be irrelevant as a lot of the Dmart Ready business is shifting to home delivery. How the top line grows and losses rapidly decrease is the way to see this business from now on.
DMart has said its home delivery business now far exceeds the company's pick-up point sales contribution. Could you quantify the revenue from the home delivery business?
We do not yet disclose these numbers.
DMart has said that in several towns the company only operates ‘home delivery’ as a delivery channel. Is this approach of offering home delivery more prevalent in large cities and metropolitan areas?
Pick-up points were launched as an idea early in the DMart Ready journey. Now we see a compelling reason to focus on home delivery as customers are rapidly shifting to this option irrespective of the town population. Especially, with the cap on home delivery charges and free delivery for orders above ₹3,000.
Also read | Home delivery eats DMart Ready’s grocery lunch
Are losses in the e-commerce business greater than those in the DMart Ready pick-up store model?
The DMart Ready pick-up point model is a subset of the DMart e-commerce business. We don’t split or declare P&L (profit and loss) for pick-up and home delivery separately.
Neville, would it be fair to conclude that in your over two-decade stint with DMart, the e-commerce business was one area where you and DMart are still trying to get the right strategy?
Of course. B2C (business-to-consumer) e-commerce is difficult in India. I believe that you make money in any business only if you are solving something meaningful for the customer. We succeeded in the brick-and-mortar business and we haven’t in the e-commerce business yet. But I don’t think we will give up.
There is no issue on strategy. Pick-up and home delivery were available from the very beginning and we clearly articulated that we will go where the customer goes. This was the thinking from the very beginning. I think it’s worthwhile to mention that we don’t have a cost of running the operations as a challenge in the e-commerce space. We have a gross margin challenge. I am confident and continue to believe in the model we have built… 100%.
One thing should also be understood, that over time e-commerce should be seen as an important ally to the brick-and-mortar business, especially in large metro towns. Reviewing the P&L and balance sheet for DMart Ready separately is a reality check for the management from a capital allocation standpoint, and that’s important, but customers don’t see it that way. For the customer, the affinity to the brand DMart continues irrespective of the channel. It’s for us to get the overall P&L construct right for a city.
We will eventually take share in micro markets of large metro towns where a DMart brick-and-mortar store won’t be possible due to paucity of large floor plate commercial properties or extremely high real estate prices. There is an organic inert silent demand for DMart Ready services in metro towns. Nonetheless, it is for the board and the incoming CEO to decide how to look at the overall business after my tenure comes to an end in January 2026.
Also read | For DMart, quick commerce threat comes to the fore