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\nBy Sachin Dave & Vikas Kumar<\/i> \nTHE ECONOMIC TIMES<\/i>
\n14 April 2008, BANGALORE<\/i><\/p> \nBy Sachin Dave & Vikas Kumar<\/i>
\nTHE ECONOMIC TIMES
<\/i> \n14 April 2008, BANGALORE<\/i><\/p>
Indian retailers are a worried lot these \ndays. There has been a decline in margins and it’s one of the lowest ever, avow \nsome retailers. As inflation touched a 41-month high, chains across the country, \nespecially the smaller players, have been trying every trick in the book to attract \nconsumers, and keep them coming in, even as they struggle to grow profitably. \n<\/p>
The first and most critical area has been margins, and retailers have been \nbargaining harder with their suppliers. Says Pushpamitra Das, CEO of Wadhawan \nFood Retail that owns the Spinach chain of food and grocery stores in Mumbai, \n"Margins of all retailers have been affected and that includes us as well. \n<\/P>
So we are trying to negotiate hard with our suppliers so that we can get \ngoods at cheaper rates and pass the benefits to consumers." There has of \ncourse been a hit on margins as well, and that’s bringing in greater focus on \nsupply chain efficiencies and vendors, adds Das. <\/P>
"In our business \nsupply is an important issue and we are now going to vendors who offer us a combination \nof the best price and quality." Spinach, like other stores, has been keeping \na close tab on its competitors’ pricing on a daily basis, and adjusting their \nrates accordingly, if required. However, lately most retailers have ended up charging \nalmost identical prices for groceries. <\/P>
<\/P>
Data released by the Department \nof Consumer Affairs shows that retail prices of grocery products has reached a \n39-month high. While sugar and oil increased by 11%, gram rose by around 3%, and \nvegetables such as onion have become dearer for consumers by 11%. <\/P>
In manufactured \nitems, sunflower oil shot up by 9% and vanaspati ghee (butter) went up 4%, while \nbutter, mustard oil, sugar and groundnut oil became expensive by 1% each. And \nwhile the government took some significant steps to counter rising food prices, \nsuch as scrapping of customs duty on crude edible oil, reduction of duties on \nrefined edible oils, and banning exports of non-basmati rice, among others, retailers \nare having to do much more to survive this bearish phase in consumer spends. Unable \nto reduce fixed costs, retailers are trying to control variable costs and thereby \nbring the total operating costs down. <\/P>
Says Andrew Levermore, CEO of the \nK-Raheja group owned Hypercity, "Many products have become costlier and some \ncustomers are either buying less or postponing their purchases, affecting our \nsales directly." And while smaller players are finding the going tough, large \nplayers like Future Group’s Pantaloon Retail seem less ruffled. Kishore Biyani, \nCEO of Future Group, says, "Demand for low end products has seen a dip while \nhigh end products, which are not price sensitive haven’t been affected that much. \nWe have still managed to give the best deals to our consumers in all segments." \nThat may have to do with the leverage that more established chains like Pantaloon \nhave with suppliers and manufacturers. <\/P>
However, protecting margins \ncan work only up to a point, says Devangshu Dutta, CEO of Third Eyesight, a retail \nconsultancy firm based in Gurgaon. Eventually, with the prospect of thinning bottom \nlines, retailers need to work on making their businesses more productive and efficient. \n"There is a need to shift focus from expansion to optimising store operations," \nhe says.<\/strong> <\/P> Meanwhile retailers are working on sustaining business \nthrough innovative promotional offers. Cross category promotions are now catching \nup where discounts are being offered on grocery purchases, redeemable against \npurchase of apparel and household products. Says RC Agarwal, CMD, Vishal Retail, \n"Most of us are now depending on promotional schemes. Even consumers have \nbecome more conscious and they would only go for the retail outlet which offers \nthe best deal, in terms of offers and price." <\/P> Many brands on the other \nhand have marginally reduced the weight of their SKUs than increase prices. When \nasked whether the retailers have followed the same path for their in-house products, \nretailers deny any such measure for their private label brands. <\/P> Explains \nR Subramanian, managing director, Subhiksha, "I think on an average there \nhas been a decrease of around 10% in the sales of grocery but year-on-year we \nhave grown."<\/P>\n","protected":false},"excerpt":{"rendered":" By Sachin Dave & Vikas Kumar THE ECONOMIC TIMES 14 April 2008, BANGALORE Indian retailers are a worried lot these days. There has been a decline in margins and it’s one of the lowest ever, avow some retailers. As inflation touched a 41-month high, chains across the country, especially the smaller players, have been trying […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"content-type":"","footnotes":""},"categories":[3],"tags":[],"class_list":["post-2811","post","type-post","status-publish","format-standard","hentry","category-press-quotes"],"yoast_head":"\n