Everyone loves a good discount

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: is concerned. “Once the consumer sees the benefit of buying goods in an organised environment, malls would be the next obvious choice for him,” says Seth of Brand Factory.

While discount works for certain goods, it may not produce the desired result for others. “Our experience has shown that value pricing does not work well for footwear and luggage. Consumers tend to get suspicious about the quality on offer. On the other hand, they flock to the store even when you offer steep discounts in apparel,” observes Venkatachalapathy.

The adage of ‘one size doesn’t fit all’ applies to discounts too. It may be interesting to point out that Wal-Mart has experimented with different store formats for China. As the per capita income of the Chinese was lower than their US counterparts, Wal-Mart had to rework its discount format so that it was accessible to a lot more Chinese. The chain also had to consider the Chinese tendency to buy in smaller quantities while devising its strategies for the market.

The bigger question is whether year round discounts bode well for the nascent retail industry in India. “Year round discounting is a reality that the industry has to face as competition hots up. It is an expensive proposition for the retailer because modern retail is not expanding at the same pace as the number of outlets and therefore for sometime the same pie has to be shared by more retailers. Retailers who can hold firm to their positioning and are able to last out the churn will eventually become winners,” says Unni.

The bottom-line is that discount retailing in the country is here to stay. Says Rohit Malhotra, operations head, South Zone, Pantaloon Retail (India) Ltd, “Hypermarkets cannot be restricted to top urban locations alone. These formats have to be expanded and there is a huge potential in smaller cities and towns. This is where aspirational India lives and young Indians across class and incomes have a strong desire to sport branded stuff.”