Retail Business Model Sustainability : An Analytical View of Select Indian Retail Businesses

Abstract

Purpose : Retail business models faced sustainability as a crucial challenge. Therefore, it was important to assess the conditions underlying their long-term economic viability.

Methodology : We assessed the selected retailers in India using the DuPont decomposition for FY2025. The selected businesses included Avenue Supermarts (D-Mart), Trent Limited (Westside/Zudio), Reliance Retail, V-Mart, and Spencer's Retail. We also qualitatively examined selected quick-commerce retailers to understand their sustainability challenges.

Findings : The study assessed three alternative models for generating sustained returns: turnover-led, margin-led, and scale-driven. D-Mart, with inventory turnover of 14 times, had 12.7% ROE and near-zero leverage. Trent, a margin-driven retailer with its in-house labels, achieved an ROE of 28% and gross margin of 43%. Reliance leveraged scale by expanding to more than 18,000 stores. The analysis led to the critical finding that the economic sustainability of Indian retail depends not on the choice of a specific retail format but on the effective synchronization of strategic decisions related to product portfolios, pricing, value chain, logistics, and resource allocation.

Practical Implications : The research had practical implications for retail strategy, emphasizing the influence of incoherent strategic choices on the uncertain future of retail businesses.

Originality/Value : This research provided an analytical lens for understanding the underlying factors that underpin a retail business’s long-term viability. It traced the evolution of Indian retail from its pre-liberalization, kirana-dominated origins to the organized retail expansion that culminated in today’s coexistence of value grocery chains, fashion specialists, conglomerate retailers, and cash-burning quick-commerce upstarts.