I have a confession to make. I am an addict. I am a slave.
For Kishore Biyani has me well and truly hooked. Every two to three days, I end up driving straight to Phoenix Mills, like something out of a ’80s american cartoon movie, parking there and heading straight to Big Bazaar. Like clockwork. I can’t seem to avoid it. Like I said, I’m addicted.
For did you know that Big Bazaar sells vegetables at least 20% cheaper than your friendly neighbourhood vegetable vendor. Sometimes 40% cheaper. For example, just the other day, tomatoes were 28 Rupees to the kilo versus 40 Rupees to the kilo in the local markets. Really – same day same vegetable. And the Big B tomatoes were probably better looking (grooming does make a difference )
In these days of high inflation and where the RBI has publicly come and said they are unable to control the price of vegetables, how does Kishore Biyani do it ? How is Big Bazaar able to control what the Reserve Bank has given up on. My suspicion is that it is a combination of two factors.
The first factor of course is a better supply chain. Fewer middlemen means lesser hoarding and prices closer to what the farmers are selling at. I say nearer though there still is a significant mark-up. But the last two legs of intra-city wholesale margins are probably something they save on. And my guess is that a significant element of hoarding that is being reported happens at this step in the chain. Hence a chain like Big B probably saves on that.
Yet, that savings (out of efficiency) is where the chains are supposed to make their money on. Why is this being passed on to consumers in this case. My working hypothesis here is based on a brief look at my average trip to Big B. While I do end up going there on account of the 12 x 2 rupees I save on 2 kilos of tomatoes and the 6 rupees I save on 1 kilo of onions (a grand saving of 30 Rupees). I end up buying my gel, shampoo,conditioner, volumizer (yes I use all these), cornflakes, maggi, detergent and so on every time i go there. And paying 50 Rupees as parking charges. In some management text-books its called a “loss-leader” strategy where clever retailers discount significantly on a few signature items in order to attract customers. In these days, where everyone is checking the prices of tomatoes and onions virtually real-time (I’m waiting for CNBC to start a real-time tarkaari ticker ), it is a great strategy to use.
Kudos to Big B for making and executing a great plan superbly. Must end this post now – gotta go to Big Bazaar!