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Retailers adopt cheaper-is-better policy


Nachiket Kelkar,CNN-IBN
Jun 29, 2008 at 09:21am IST

Mumbai: Retailers have been struggling for footfalls ever since the commodity prices started moving upwards a few months ago. Now they are battling inflation with various out-of-the-box initiatives to keep the customers happy.

Big Bazar, India's largest super market chain, has planned to put a slew of cheap in-house brands on its shelves.

It plans to up its import of electronic goods from China for its brand Koryo. Also on the list are imports of consumer goods like cereals and chocolates from Thailand and Malaysia.

These imported goods are expected to cost 15-20 per cent lesser than their Indian equivalents.

Analysts say products like bread, cereals and detergents will be the first to be down-traded by consumers as prices of branded goods rise.

“This is an opportunity for low cost retailers to do exceedingly well. They will see more footfalls. Whoever offers best value for money and best prices would probably do well,” Partner, Ernst & Young, Pinaki Mishra said.

Subhiksha — the South-based discount retailer — has seen a drop in sales of branded goods like sunflower oil, rice and cream biscuits, while demand for its own in-house brands are on the rise.

The company has more than 180 products under its private label programme, which accounts for 13 per cent of the total products on the shop floor.

By the end of the year it aims to increase it to 240 or 17.5 per cent of the total products it will have on offer.

“There are things like potato wafers, the whole processed items, cleaners — household cleaners, toilet cleaners, etc, where we see a high uptake,” MD Subhiksha R Subramanian said.

But that could mean bad news for FMCG companies, which are already under cost pressures, who too may are making efforts to woo consumers by offering freebies and other incentives.

So as the retailers and FMCG players slug it out to keep the charts moving, pricing will be the key to the customer's wallet.

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