The Hindu Business Line : What they say

Considering modern retail formats deal directly with the FMCG companies, the intermediaries are eliminated and there is already some cost saving on trade margins. Observes Mazyar Kotwal, Senior Manager, Advisory Services, KPMG, "It all depends on who needs whom more. Such retailers are simply reworking their supply chain model.

They are not justified in charging higher margins since they are directly dealing with the FMCG companies and there is elimination of intermediaries."

At the same time modern retailers well realise the advantages they are giving the brands. As Bipin Gurnani, CEO, Piramyd Megastore, says: "Brands and manufacturers understand the advantages of modern trade. Modern day retailers reach out to more people giving a visibly better display. The throughput per store and the cost of contact is much higher for such retailers and brands owners well understand this. In fact, the sale of a single modern day retailer may be several times that of a kirana stores. Such retailers actually give an opportunity for brands to get the right visibility."

Considering some of the FMCG brands are using modern retail to launch their brands and selling large and premium packs through such formats, they should not exactly be complaining about the hiked margins, say retailers. As Pantaloon's Mall says, "It is a new way of thinking on our part since we realise the consumption patterns of tomorrow."

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