To Market, To Market, To Buy Everything

The Naidus are not going to be disappointed. A branded microwave oven costs Rs 6,500 while at the local retailer’s it costs nothing less than Rs 9,000. Sundrop’s 15-litre oil can (MRP Rs 1,045) is available for Rs 815, and a 10kg bag of Naturefresh atta (MRP Rs 185) for Rs 135. While the discounts go up to 30 per cent in the case of personal care products like shampoos, soaps and lotions, you can get 15 per cent off on your favourite Indigo Nation shirt and save another 10-15 per cent on food, vegetables and groceries. Hypermarts offer discounts upto an astounding 60 per cent. On durables and appliances, which already come at very little margins, the customer gets around 10 per cent discount.

There are already two popular hypermarkets in Hyderabad with a combined floor space of 1,10,000 sq feet, one each in Bangalore, Mumbai and Kolkata, with plans for more chains in these and other metros. Almost 2,00,000 people frequent the three existing hypermarts every week and the footfall (the number of people visiting a store) for some touch 6,500, and goes up to 10,000 on weekends.

Retailing is big business in a nation of one billion people and the figures are numbing. In 2000-01, we spent around $280 billion (Rs 13,50,000 crore) and if the Centre for Monitoring Indian Economy (CMIE) data is to be believed, the figure is expected to reach a whopping $375 billion (Rs 18,000,000 crore) by 2005-06.

Says Harminder Sahni of KSA Technopak, a retail consultancy firm, ‘‘Fifty-two per cent of our expenditure goes into food, beverage and tobacco followed by 11 per cent on clothing and footwear. While another 9 per cent goes into housing, 7 per cent goes in for furniture, durables, etc. Hypermarkets have taken the right route to success — food and groceries rule their product portfolio and when it is offered at wholesale rates, that too in the heart of the city, there is no question of failure.’’

Hypermarkets are a modern form of retail and distribution and its strategy is based on five major marketing values — a very aggressive price discount policy, the goal being to increase the purchasing power of the customer; a wide range of products; quantity, quality and variety; availability under one roof; and modernity and innovation in retail. Largely driven by a fierce price competition, the success of hypermarts is based on the notion of mega discount offers. They ideally stock 60 per cent food and 40 per cent non-food items.

Though hypermarts are still to hit the fast track in India, their success is evident from the fact that many big business houses are planning to enter the segment. Apart from the R P Goenka Group which is already in the business, the Tatas have made their plans public while speculation is rife about Reliance’s entry into the segment. There is also a homegrown variety of hypermarts here — mega discount stores with one thing in common — pricing products below the MRP.

Says Kishore Biyani, Managing Director of Pantaloon Retail, the company which owns the Big Bazaar chain of stores, ‘‘Discount shops are clearly leading the way globally with hypermarts accounting for around 60 per cent of the retail sales. We will have to follow the trend.’’

But as R Subramaniam, Managing Director of the Chennai-based Subhiksha chain of stores, which offers food, provisions and pharmaceutical products under one roof, says, ‘‘We need to consolidate our position first before we change our stock profile.’’

Commenting on the nervous retail sector in the country, K N Iyer of Pyramid Megastore, with stores in Mumbai and Pune, echoes Subramaniam when he says, ‘‘Our market is still quite immature. We are still in the second stage of development.’’

It was in 2001, when the Rs 6,000-crore RPG Group brought the first hypermart to India with Giant. Raghu Pillai, who heads the retail division of RPG Enterprises, says, ‘‘The overall response to Giant has been fantastic and we have witnessed excellent growth month-on-month.’’ The venture, a collaboration with Hong Kong’s leading pan-Asian food and drug store retailer Dairy Farm, now has plans set to open 19 more stores over the next three years. ‘‘We’ll soon have one in Delhi, Kolkata, Bangalore and Chandigarh. With a store size of around 45,000-50,000 sq feet, it would cost us Rs 15-18 crore each (without the land). Our prices are all below the MRP with a 2-20 per cent discount and we will keep offering promotion products which will change every month.’’

Big Bazar, with a presence in three metros — Hyderabad, Bangalore and Kolkata, — stocks close to 1.5 lakh items across 18 product categories. Says Biyani, ‘‘We get over 22,000 customers daily with sales over Rs 30 lakh from all the three stores.’’ The company has invested a total of Rs 30 crore in each store and has four openings in the offing — one each in Gurgaon and Mumbai in February and the next two in Nagpur and Mumbai again in the second half of 2003.

While Delhi and the rest of the northern region is still to get their hypermart, some retail chains have come together to set up the first hypermart. The Home Store, a chain for home products and accessories, Lifespring, the Morepen Group owned chain of health and beauty stores and Ansal Housing and Construction will set up their chain of six hypermarkets called the Metro Sabka Bazaar in Delhi and the NCR region. With an investment of over Rs 50 crore, optimism is running high. Says Arif Sheikh, Managing Director of The Home Store, ‘‘The idea is to expand on our already existing chain of superstores, Sabka Bazar.

And so, Indu Balasubramanium, who lives in a joint family with 11 members, encourages her mother-in-law to shop in Bangalore’s hypermart despite the fact she ends up spending more than she intended to. ‘‘We get everything at one place and the discounts are great. I would say it is worth it.’’

It is also the reason which propels Radha Ranganathan of Hyderabad, who shops with her neighbours. ‘‘We are a group of four and we shop for everything at our hypermart. Not only is it accessible but because we buy in bulk, our savings multiply further.’’ The consumer is finally king.