DMart: Why private labels matter to the company

# DMart: Why private labels matter Avenue Supermarts Limited is using private labels selectively to improve customer value while protecting margins. Management follows a 20-20-20 framework before pushing a private-label product. **What is the strategy:** DMart aims to use private labels only when they can offer customers at least 20% price advantage, generate at least 20% more margin than the benchmark and achieve at least 20% volume share. Management says it is not trying to replace established brands across the store. This approach fits DMart's core value-retail model. Private labels can give the retailer greater control over pricing, sourcing and margins while offering customers a lower-priced alternative. TheThe challenge is that Indian consumers remain highly brand-conscious. That means DMart cannot simply introduce private labels everywhere and expect customers to switch. The product has to provide a clear value proposition. DMart's scale gives it another advantage. The company had 503 stores at the end of June 2026, while FY26 ended with 500 stores and 20.58 million sq. ft. of retail area. **My view:** The interesting part of DMart's private-label strategy is its selectivity. The company is not chasing private-label share for its own sake. It is looking for categories where it can simultaneously offer lower prices and earn better margins. If executed well, this can strengthen DMart's value proposition and improve merchandise economics without relying entirely on price increases. **What I'm watching:** private-label penetration, gross margin, customer acceptance, sales per sq. ft. and general merchandise margins. **Stance:** The success of DMart's private-label strategy should be measured by incremental customer value and margin improvement, not simply by the number of private-label products launched. **Disclosure:** I am a SEBI Registered Research Analyst. Please refer to the applicable disclosures before taking any investment decision.