Subhiksha: The teething troubles of Indian retail story

At a time when big retailers like Reliance Retail and others are facing stiff resistance for having hit the bottomline of small time mom-and -pop shops, a southern stand-alone is using the opportunity to quietly go about its job. The no-frill retailer Subhiksha has taken the populist route of luring customers with ‘less money for greater value’ strategy. It’s time to welcome the socialism in shopping.

The idea is to “welcome a person with dirty slippers with the same zeal as we greet somebody who has parked his big long car outside the store,” says Subhiksha’s West Delhi Retail Outlet Manager Ravi. His confidence, probably, stems from the fact that the Rs 800 crore Subhiksha has nothing but survived the onslaught of bigger fish in the sea of retail with its stand-alone and low key format so far.

But victory is still not in sight. The volume game that Subhiksha decided to play by has its own flip side. Too many stores in vicinity in the same area are eating into the margins of outlets. So the chain is busy fighting its own kith and kin. And that is not without having to jostle for space in competitors’ territory. The problems have only started to surface.

At present, Subhiksha offers discounts in the range of 7 to 10 per cent on almost every item. The acceptability of the concept of discount retailing has always been there, but how does Subhiksha manage it so consistently?

Says Ravi, “Unlike mall centric retail outlets where primarily, high end customers are in the scheme of things, we have chosen to focus on the middle class. And for that very reason we cannot afford to ignore the discount part. To ensure loyalty, consistent low price is the only carrot in this competitive sector.”

And when a retailer aims to dish out discounts of about 10 per cent on every unit’s MRP, it is imperative to have presence in as many centres as possible. According to Ravi that is the only reason for going ubiquitous, “With lesser margins, we have to have volumes on our side to compensate.”

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