Big Bazaar’s Discount Scheme Is Not A Strategy To Battle E-tailers, Says Kishore Biyani

Future Group is set to launch a discount scheme starting June, on the first eight days of every month at its retail arm and the country's largest supermarket chain Big Bazaar. While some media reports have suggested that this could be an aggressive attempt by Future Group to compete with e-tailers such as Amazon and Flipkart, Kishore Biyani, group CEO of Future Group has denied that the discount scheme has anything to do with their competition with e-tailers.

“We have launched this discount scheme to increase frequencies of our customers which is in line with our vision of creating a 1 crore customer base who shop for more than Rs 1 lakh each every year. It has nothing to do with competition with the online space,” Biyani told BW Businessworld.

As per the scheme, every customer who buys goods worth Rs 2,500 will get cash bonuses and vouchers across segments worth Rs 2,000, redeemable for the rest of the month. Biyani announced this reward system last week internally to all employees on Google Hangout.

Analysts believe offline players have always tried to match up to the discounts of the online players. “Price is a very important component in the Indian market and such moves by players like Big Bazaar aims to change the mindset of those customers who shop online just for the low cost or discounts. However, online customers who look beyond cost to other factors like range, convenience, and ease of shopping, will continue to shop online,” says Pragya Singh, Vice President, Technopak Advisors.

The online grocery space in India is already seeing some turbulence with Flipkart shutting its groceries app ‘Nearby’ just few months after its experimental launch in October last year.

However, Amazon India is bucking the trend by aggressively focusing on the groceries business with the launch of ‘Amazon Now’ in Bengaluru earlier this year to deliver groceries and staples in less than two hours of receiving orders. Bigbasket is currently the leader in the inventory-led grocery model, while ZopNow has moved to a marketplace model. Others like Grofers run on a mix of inventory and marketplace model.

Industry experts believe that discounts by retailers such as Big Bazaar will only have the potential to temporarily capture online customers. The biggest challenge for physical stores will be to provide the convenience of online, which is a significant upgrade of user experience. India is a price sensitive market and price will continue to be a critical component for both online and offline, but the key will lie in quality and convenience. The quality of products gains even more significance in case of groceries where consumer health is at stake.