Retail: DMart vs Zudio vs Intune

24 Aug 2023 , 10:47 AM

In recent years, the Value Fashion category has witnessed an accelerated pace of store additions with the likes of Reliance Trends and Zudio (Trent) leading the way. Analysts of IIFL Capital Services visited a store of Zudio, Intune (recently launched format by Shoppers Stop) and DMart in the same micro market, to gather insights in this attractive, but increasingly competitive format. They found Zudio as a more complete Value Fashion destination, while Intune seemed unable to offer any incremental differentiated proposition vs Zudio. DMart will most likely shrink its apparel offerings materially as it will find it difficult to compete in this space, and focus on general merchandise instead. 

Competition rising in Value Fashion: 

~68% of the Apparel Retail market in India is unorganised. Organised Value Fashion serves as a bridge for the unorganised consumer to enter the organised space. The segment remains well placed for growth in the medium term. However, with new players (Zudio and Intune) and the existing players (Reliance Trends, Max, Pantaloons and V-Mart) accelerating store additions in recent years, competition has increased. 

Zudio stands out, Intune struggles: 

Analysts of IIFL Capital Services recently visited a store of Trent’s Zudio, Shoppers Stop’s recently launched Intune and DMart’s apparel section, respectively. While each format has its pros and cons, they found Zudio as a more complete value fashion format in terms of ambience, fashion merchandise, sharp price points and depth of assortment. On the other hand, Intune still has some work to do with regard to the aforementioned aspects; it is still early (less than a week between store launch and analysts of IIFL Capital Services store visit) and they expect the format to evolve over time. 

DMart losing out: 

DMart offers the lowest price points in case of most SKUs, a large store layout and an extensive breadth of assortment spanning various sub-categories. However, analysts of IIFL Capital Services found the fashion quotient subpar, more suitable for daily wear and not catering to the aspirational needs of the consumer. Retail experience was also ordinary with no differentiation vs other sub-categories, such as grocery or personal care. 

Road ahead: 

In its analyst meet, DMart mentioned that a competitor in Value Fashion is typically opening stores near an existing DMart store, to leverage the latter’s ability of attracting footfalls. However, it also mentioned its constraints around improving aspects such as fashion merchandise and retail experience in the store. Unless competition slows down its store additions, revival of DMart’s apparel category seems unlikely. In case of Zudio, Trent management has guided to accelerate store addition to 200 new stores in FY24 (~40 gross additions in Q1FY24). On the other hand, Intune is expected to remain in a trial phase in the near term.