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Discount retail: Cheer in the bargain basement

Hafte ka sabse sasta din (The most important day of the week) is what Big Bazaar calls Wednesday. It certainly is in Mumbai homemaker Anjali Salunke’s weekly itinerary.

india Updated: Dec 13, 2008 20:49 IST

Hafte ka sabse sasta din

(The most important day of the week) is what Big Bazaar calls Wednesday. It certainly is in Mumbai homemaker Anjali Salunke’s weekly itinerary. Buying vegetables and grocery on Wednesday — when the discount retailer offers big bargains – helps Salunke keep the kitchen budget for her family of four under Rs 4,000 a month.

“I save Rs 1,000 on what I would spend if I bought groceries at a neighbourhood kirana store,” she says.

As wallets get lighter with high inflation and an economic slowdown, consumers in India — always a tad cost conscious — are increasingly switching to discount stores and bargain sales. That’s good news for large-format discount retailers, which hit the Indian market some four years ago and have seen robust expansion.

Sales at Future Group’s Big Bazaar and other discount outlets in October were up 87 per cent from a year ago. Same store growth for value retailing stood at 49 per cent. Godrej No 1, the good-value soap brand, has been growing at 25 per cent year-on-year since April. The Grab Store, a multi-brand apparel retail chain, overshot its sales target for the festive season by 27 to 32 per cent this year.

And this trend is expected to continue, as budget shopping gains currency with the economy showing fewer signs of an early
revival.

“Our average selling price is Rs 425. Customers are willing to spend on the small ticket size we offer,” says Harish Shah, business development manager at The Grab. “You cannot do away with essentials like clothing.”

Also, multi-brand retailers are likely to have an edge over others.

“A single brand store can have only one or two end-of-season sales, whereas in multi-brand discount stores, the customer enjoys a discount price (sometimes up to 80 per cent) around the year,” Shah points out.

It’s the same story with consumer durables. Akshat Doshi, a marketing professional, recently bought an LCD TV with a combo offer of a home theatre system. “A good television set is a necessity for city dwellers like us to unwind after a long day at work,” Doshi says. And a home theatre system, according to his wife, Arpita, is a “cheaper option” to seeing movies in theatres.

Ajit Joshi, CEO, Infinity Retail, a Tata enterprise that runs discount electronic goods store chain Croma, says sales
during Diwali were “phenomenally good” because of “extremely good pricing” — a 32-inch LCD TV was sold between Rs 25,000 to Rs 29,000.

Electronics Bazaar and eZone, the retail chains for electronic items from the Future Group, posted more than 25 per cent growth in sales in October, says Manoj Kumar, CEO, eZone.

For thrifty middle-class India, a good bargain is hard to resist even in the worst of times.