Introduction
Avenue Supermarts, the company behind the DMart chain, has built its entire retail model around one core belief: own the land, own the story. That philosophy has quietly been bending over the past couple of years, and the company's own management recently admitted as much. Land acquisition has grown genuinely tough in certain pockets of the country, and DMart is now willing to lease where it once insisted on buying outright.
A Two Decade Old Ownership Playbook
For over two decades, DMart stood apart from most Indian retailers by refusing to lease commercial space the way competitors typically did. The company preferred buying plots outright or signing extremely long tenure lease arrangements running past thirty years, structures that function almost like ownership. That approach gave DMart control over costs and layout, and it kept rental inflation from eating into margins the way it does for chains dependent on shorter term leases.
The Stance Is Visibly Softening
That position is now clearly shifting. During a recent investor interaction, company leadership confirmed that DMart currently operates 68 stores under long-term lease arrangements, a number that has been climbing steadily. Management also indicated a willingness to expand this approach further, provided lease terms align with the company's return expectations and operational needs.
NCR Emerges as the Pressure Point
The National Capital Region has emerged as a specific pain point in this conversation. DMart's leadership pointed to NCR as a market where suitable land parcels at reasonable valuations have become genuinely difficult to secure. Delhi and its surrounding satellite cities carry some of the steepest land prices in the country, and plots large enough for a typical DMart format store are increasingly scarce or priced well beyond what the company's acquisition model can absorb.
Working Around the Constraint
Rather than slow down expansion in a market as large and consumption heavy as NCR, DMart appears ready to work around the constraint through leasing. This marks a meaningful shift in tone from a company that has historically treated land ownership as central to its low cost operating structure, and it suggests leadership sees enough long term value in the northern market to bend a well established playbook.
The Numbers Behind the Expansion
DMart added a new outlet in Barabanki, Uttar Pradesh, in early August, taking its total store count past the 500 mark. The company has set a target of growing its store base by roughly fifteen percent annually going forward, which works out to somewhere near seventy five new stores given its current scale. Last year alone, DMart opened eighty five stores, and fifteen of those came through lease arrangements rather than outright purchase.
A Gradual Hybrid Model
That ratio, while still modest compared to the overall store count, signals a deliberate move toward a hybrid model rather than a sudden abandonment of the ownership approach that built the brand. Management has also spoken about maintaining a store execution pipeline stretching two to three years, based largely on how much suitable land the company currently holds or has under negotiation.
What This Means for Investors
For a company whose cost advantage has historically rested on owning real estate rather than renting it, this shift carries real significance for how analysts read DMart's future capital expenditure and return on capital metrics. A higher share of leased stores could ease upfront capital pressure, even as it introduces new variables around long term rental costs the company has traditionally avoided.
Summary
DMart's growing comfort with leasing marks a notable departure from its long standing land ownership strategy, driven largely by acquisition challenges in markets like the National Capital Region. With 68 stores already on lease and store count crossing 500 after its recent Barabanki opening, Avenue Supermarts appears to be balancing its traditional ownership model with practical flexibility to sustain expansion in high cost, land constrained urban markets across India.
