D-Mart Built an Empire on Never Paying Rent. In 2026, It Started.
For more than two decades, D-Mart's strategy was almost embarrassingly simple to explain and nearly impossible to copy: while every other Indian retailer leased its stores, D-Mart bought the building.
Kanav Bajaj
5/19/20264 min read
For more than two decades, D-Mart's strategy was almost embarrassingly simple to explain and nearly impossible to copy: while every other Indian retailer leased its stores, D-Mart bought the building. Founder Radhakishan Damani funded the purchases out of the company's own cash flow, avoided debt almost entirely, and ran the most profitable large-format retail chain in the country on the back of a cost line that, for most competitors, eats 4–6% of revenue and for D-Mart barely existed. In April 2026, the company crossed 500 stores. That same quarter, for the first time in its history, it leased dozens of them instead of buying — and investors rewarded the shift with a 30% stock rally.
That's the twist worth understanding: the thing D-Mart became famous for not doing is now, deliberately, something it's doing.
Why owning the building was the whole strategy. When Damani opened the first D-Mart in Powai in 2002, Indian supermarkets typically leased small, roughly 4,000 sq ft outlets. D-Mart did the opposite — large-format stores of 30,000 sq ft or more, usually owned outright or locked into 30-year leases that functioned like ownership. The logic was structural, not sentimental. Rent is a recurring cost that rises every year, often built into lease escalation clauses, and it scales with however successful a location becomes — landlords renegotiate upward precisely when a store is doing well. Owning the property converts that variable, rising cost into a fixed, one-time capital outlay. Every year a store stays open, the gap between D-Mart's occupancy cost and a leased competitor's widens further. Combined with a tight SKU count, fast inventory turns, and aggressive vendor terms, this is what let D-Mart run thinner retail margins than almost anyone and still post industry-leading return on capital — the discount wasn't subsidised by investors, it was subsidised by not having a landlord.
The same strategy was also D-Mart's biggest constraint. Buying land and constructing a store takes far longer than signing a lease, and it ties up far more capital per outlet. D-Mart's own 2017 IPO prospectus said as much directly, warning that the ownership model "requires greater capital for opening of each store," and that expansion might not keep pace with earlier years as a result. For most of D-Mart's history, that trade-off was acceptable — Indian organised retail itself was growing slowly enough that a deliberate, owned-real-estate rollout could still outrun the competition. That stopped being true around 2024–25, as Reliance Retail's scale, Tata's Trent, and a wave of 10-minute quick-commerce platforms — Blinkit, Instamart, Zepto — all began compounding for market share at a pace D-Mart's land-buying playbook simply couldn't match store for store.
The pivot, and what it costs. Anshul Asawa took over as CEO in February 2026, succeeding longtime MD Neville Noronha, and the leasing shift followed almost immediately. D-Mart opened a record 58 stores in a single quarter — Q4 FY26 — leaning on leased space to do it. Analysts at JM Financial and Motilal Oswal now think the faster cadence could lift D-Mart's historical 10–12% annual growth rate to as much as 18–20% if sustained, and the stock rallied roughly 30% off its March lows on that re-rating. But the trade-off is exactly the one the old model was built to avoid: rent is back on the books, and it shows. EBITDA margins, historically in the 8.5–9.2% range, slipped to 7.3% in the quarter the leasing push began — partly higher employee costs, partly a bigger mix of lower-margin grocery, but partly the simple fact that leased stores cost more to run, every single month, than owned ones ever did.
It's a pivot, not an abandonment. D-Mart hasn't actually stopped buying property — far from it. In June 2026 alone, the company picked up a ₹106 crore commercial building in Bengaluru's Panathur locality, the latest in a string of acquisitions stretching back through a Chandivali land parcel in 2024, a Kandivali retail space in 2023, and close to ₹400 crore in opportunistic buying during the pandemic, when other corporates were retreating from real estate. The more accurate read is that D-Mart now runs two playbooks at once: own the property in markets it's confident will sustain a store for decades, and lease fast into newer, less-proven micro-markets where speed matters more than long-term occupancy cost — essentially betting capital discipline on the locations it trusts most, and renting its way into the ones it's still testing.
What to watch. The number that will settle whether this was a smart evolution or a costly retreat is D-Mart's rent-to-revenue ratio over the next several quarters — whether it stabilises well below the 4–6% industry norm or keeps climbing toward it. Worth tracking alongside it: whether the new leased stores match the revenue-per-square-foot productivity of D-Mart's owned ones, since a leased store that underperforms is a worse outcome on every axis than an owned one that does the same. If margins keep compressing while growth doesn't actually accelerate to the 18–20% analysts are pricing in, the market's verdict on this pivot will reverse quickly.
D-Mart's real "secret" was never the specific tactic of owning buildings — it was matching its capital strategy to the competitive pace it actually needed to run at. For twenty years, that pace rewarded patience and ownership. In 2026, for the first time, it rewards speed instead. The interesting question isn't whether D-Mart broke its own rule. It's whether the rule was ever really about real estate at all, or just about reading the moment correctly — and whether it's reading this one right.
Sources: Avenue Supermarts (DMart) public filings and IPO prospectus (2017); company store-count and real-estate acquisition disclosures via Business Standard, Wikipedia, and CRE Matrix data (2021–2026); Q2 and Q4 FY26 results commentary and analyst notes via Whalesbook and brokerage coverage (JM Financial, Motilal Oswal, CLSA, Bank of America, April 2026). Figures reflect publicly reported data as of June 2026 and should be reverified against D-Mart's latest quarterly filings before publishing.