Big Bazaar's Saste Din, Saste in name only
Big Bazaar and the culture of always low prices has finally arrived here in India. The question is – does Big Bazaar match consumer expectations, or are they just making empty promises.
I paid a visit to the local Big Bazaar at Fatima Nagar in Pune on Republic Day. Kishore Biyani’s retail chain was having its fabled Sabse Saste 3 Din (3 Cheapest days) on that weekend. Much has been written about the Sale in Kishore’s book – It Happened in India. I decided I was going to have check out what the fuss was all about.
Sure enough, there was a line that stretched around the store with people waiting to get in. The phenomena was not limited to the Pune store and could be seen at every Big Bazaar in India. While waiting in line, a middle aged housewife asked us if we had been to the sale before. She explained to us how the store would announce impromptu deals on many items with spot discounts valid only for about an hour. She also warned us that we need to look at not only the price point, but also the deal terms very carefully (fine print). Many items had been excluded from deals – including Jewelery.
It took about 20 minutes to get in to the store. The wait was brief and there were services (chaat, snacks) outside the store presumably for those waiting. Kishore Biyani has designed his Big Bazaars around the idea of contemporary Mandi or Bazaar with grey (austere) tiling and minimal Air Conditioning. Stocks have been organized, but not hung for display. Clothes and other non-electronic items were arranged in wire-mesh boxes. As Kishore describes in the book, the entire idea of the Big Bazaar is to target the Service employed Indian. He calls this class India II, which serves the minority consuming class. This class now has a sizable spend on improving their lives. The model is based on maintaining margins and drawing customers in en-masse, enough to get the buzz going around the store and the discounts. He suggests that his stores, lighting, tiling, layout and staff are all tailored to help the average Indian be comfortable when shopping.
Once in the store, like many other customers, I focused on the items going cheap. For example, a locally made DVD player was being sold for Rs. 1,200/- against the Philips DVD player at Rs. 3,110/-. For the price-conscious consumer, the unbranded DVD player was a bargain. There were other items like the DVD player, Flash Drives and Plastics being offered under a discount.
Surprisingly, the Croma store next door to the Big Bazaar was a lot cheaper than the Big Bazaar for the same electronic items. For example, 2GB Flash Drives were Rs. 50/- cheaper than the same in Big Bazaar. Also, the same plastic containers were cheaper at the Tru-Mart. Big Bazaar seems to be employing the old bait and switch trick. Anjali, with her knowledge of how retail works says that the bait for customers are the low prices for aate-daal (or common items like Flour, Pulses, Onions, Potatoes). However, not all prices are kept at their theoretical retail minimum, which explains the Flash Drive which was priced lower at Croma.
Big Bazaar’s Marketing is definitely very savvy. Indeed, how many stores in India can boast of long lines outside the store? Their prices on the other hand leave much to be desired. I am willing to bet that the stores inventory turns are much higher than the Industry average and their margins are higher too. Their prices are therefore irrational.
Retail chains like Pantaloon’s Central, Piramyd’s and Shoppers Stops’ which serve India I – the consuming class, suffer from depressed margins thanks to rapidly appreciating real estate. Big Bazaar are relatively better off than the other chains since they target areas going for lower than premium and make better use of their floor space. Their entire strategy is to get as many people in to the door as possible. In fact, the Salesman to Customer ratio at these stores is skewed when compared to Central or Piramyd.
The appeal of low prices and bargains spans not only consumer classes but even cultures or galaxies. So, if Big Bazaar has managed to attract the masses, and convince them that they’re getting value for their money, they will only attract more of them. Walmart started with suburbs in central and southern America, but today they’re global because their promise always low prices is universally appealing. As long as they deliver on it or ensure that you don’t find out, they’re unbeatable. After all, what explains why someone like me was deal hunting at Big Bazaar?