veterans are of the opinion that price is not a major deciding factor in the retail business, rather it's service and convenience that play a major role. But there is one retail brand that has built its success entirely on price.
At the CII Retail Summit, Mohit Khattar, marketing director, Subhiksha, outlined the role of Subhiksha as a major retail entity in the growth of the organised retail segment in India. Khattar revealed that Subhiksha's Everyday Low Price (EDLP) strategy on various goods across their stores has largely contributed to its success. This low price strategy, coupled with the service of home delivery, has helped it garner customer loyalty.
Khattar says that in order to play a price-effective game in the food and retail sector, one needs to cut down the involvement of middlemen and go in for direct purchases.
Comparing large retail stores with small neighbourhood outlets such as Subhikhsa, Khattar said large retail stores may be ahead in terms of space, but the consumer traffic is low in comparison. Larger retail stores are ideal for durables such as garments whereas smaller retail stores are apt for grocery, pharma and so on.
Speaking on the Indian consumer mindset, Khattar explained that, "The Indian consumer is obsessed with purchasing food items that are fresh and needs to buy them frequently. The most important thing is that the food and grocery store has to be located nearby, thus saving time and transportation charges."
Subhiksha claims to be the first to have 500 stores across the country, and is soon to cross the 1,000 mark in October this year. It seems that it was also the first to offer discounts on medicines.
Khattar explained the strategy behind Subhiksha's functioning by saying: "We offer the lowest prices everyday on everything and we have the convenience of proximity, quick transactions, home delivery and phone orders." He concluded the presentation by stating that efficiency is the key driver and having a lean and mean cost structure benefits the growth of the retail brand.