The Hindu Business Line : Consumers seek out value retailers …

While foods may be the primary category to be driving the trend of value retailers seeing a surge in sales, apparel as a category has yet to witness a similar trend.

Purvita Chatterjee

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Mumbai, July 9 As inflation raises its ugly head, for value-based discount retailers it does paint a pretty picture. The country’s largest value retailer, Big Bazaar, is already witnessing a surge in sales by 24 per cent, led by the foods category.

With consumers beginning to downtrade, Big Bazaar has been the first one to record this trend. Speaking to Business Line, Mr Rajan Malhotra, CEO, Big Bazaar said, “We have seen our sales growth surge by 24 per cent across categories and brands but led primarily by foods.”

Considering Big Bazaar was expecting a downtrend in sales post the summer holiday season, the trend has been reverse this year. As Mr Malhotra points out, “This is the first time that we have witnessed an uptrend in sales post the holiday season. There may be something more to it but inflation is the main reason people are looking at better bargains and we have seen this trend since July 1.”

‘Cream to Marie’

Other value retailers like Subhiksha also believe that downtrading (buying cheaper) is happening more among food-based mass consumption products and is also witnessing a similar trend. Mr R. Subramanian, Managing Director, Subhiksha Retail, says, “Very clearly there is downtrading in mass consumption items such as oils, detergents and biscuits. Somebody who was having cream biscuits is now moving to the Marie category. There has been downtrading to the extent of nearly 20 per cent at our stores.”

While foods may be the primary category to be driving the trend of value retailers seeing a surge in sales, apparel as a category has yet to witness a similar trend. For instance, Megamart, a value retailer in the apparel category, has yet to see an increase in sales.

According to Mr J. Suresh, CEO, Megamart, “Inflation is catching up more in the FMCG sector than in apparels. While our growth has been better than in branded retail, it does not necessarily indicate downgrading by consumers. But going forward, we expect to see a surge in sales in the festival months of October and November.”

Upmarket retailers

At the same time, the more upmarket retailers seem to be unaffected by the menace of inflation. Claiming to be insulated by its ill effects, Mr Andrew Levermore, CEO, Hypercity, says, “We cater to an upper section of consumers who are not affected by inflation.

These are consumers with high disposable incomes and prefer high quality products and are unlikely to downtrade. Our experience with growth has been ahead of inflation. Inflation is more to do with the mass market and at Hypercity, we believe in being inflation proof.”

At the same time, other retailers continue to fear downtrading by consumers in the near future. Mr Mahesh Shah, CEO, Hometown (a Future Group Company), says, “Till today there has been no such indication by our consumers but we fear they may downtrade in future.”

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