Trent fails to trigger price war in organised retailing sector

Star India Bazaar, a hypermarket launched recently in Ahmedabad by the Tata enterprise Trent Ltd has set a new benchmark in the organised retailing market of the city by offering a slew of promotional offers.

However, the existing players in the organised retailing market said that this will not trigger a price war in organised retailing. Players in the industry say that the withdrawal of some promotional offers due to lack of stocks proves that promotions on such high scales are not possible to sustain.

Promising lowest prices, a large assortment of goods and the concept of private labeling, Trent Ltd, launched its first hypermarket in the country with the first outlet in Ahmedabad in last week of October.

Some of the offers that Star India Bazaar introduced included potatoes at almost half the price, jeans for Rs 99 a piece and sugar for Rs 9.95 per kilogram among others. Officials of Star India Bazaar were not available for comment.

The Star India Bazaar outlet has groceries, staple foods, beverages, snacks, health and beauty products, vegetables, fruits, dairy products, homecare products, household goods, garments, consumer durables, electronics and a range of Trent in-house brands. About 10,000 consumers walk into the Star India Bazaar daily.

Vahid Ravji, chief operating officer of B2C India Ltd, the company that runs the Adani supermarket and hypermarket chain said: "The margins in the supermarket and hypermarket retailing business are rather low and it might perhaps not be able for other hypermarkets to continuously offer the kind of promotion prices that were recently offered. However what will definitely happen with the arrival of several chains of hypermarkets is that small retailers will definitely be affected."

Ravji said that in the last one year, the Adani group has literally doubled its outlets in the state and will continue on its growth plans as per schedule. From a turnover of Rs 35 crore in the 2003-04, B2C India Limited has chalked out plans of reaching a turnover of Rs 1,200 crore by the next four years.

In the present fiscal alone, the company expects its turnover to increase by more than three times to Rs 120 crore. B2C has so far invested a sum in excess of Rs 15 crore in the supermarket and hypermarket chain and will invest an additional 25 crore by the next three years, taking the total investments in the chain to Rs 40 crore.

Other players in the organised retailing however point out that they would rather go in for promotions that they can sustain.

"What is the point in exhausting stocks within two hours and having the cops to step in to avert a near stampede. In fact, withdrawing offers within two or three days of announcing them is harmful to a company and its prospects," said an official of a retailing chain.