Indian Retail Industry-Pantaloon Retail (India) Ltd.- Two Basic Forms of Retailers (Part IV)

Low-End Retail Industry Culture

Low-end products are generally price driven and hence it may be observed often that “as low-end retailers upgrade their strategies to increase sales and profit margins, new forms of low-price (discount) retailers take their place in the market” (Zentes, Morschett & Schramm-Klein, 2007, pp.10). However, the major problem that ensues from this type of retailing activities is that “greater choice at low end of retail hierarchy produces decline in smaller centers” (Jones, Jones & Simmons, 1990, pp.179). Low-end retailers occupy a position of strategic importance in the highly interesting retail sector because of the fact that “according to the wheel of retailing hypothesis, retail businesses begin as low-margin, low-priced, low-status operations” (Pride, Hughes & Kapoor, 2008, pp.508).

These retailers rely heavily on competitive pricing that employs discounting as one of the main strategies. Although it is often believed that the products offered by these retailers fall short as far as their quality is concerned, their numbers are commendably high in almost all markets. According to Bhatia (2008) “everyday low pricing (EDLP) is a pricing strategy that has become increasingly popular in the last decade” and he has further opined that “retailers who operate this policy strive to offer very competitive prices on their entire product range, all of the time” (Bhatia, 2008, pp.308). EDLP, according to him, “is a popular strategy with the majority of retail customers because they feel they are receiving a fair deal; the pricing message is straightforward rather than being bound up in a complicated array of product/price offers” (Bhatia, 2008, pp.308). Perhaps this is the main reason behind the proliferation of low-end retailers in the Indian subcontinent, as – despite the fact that it is one the fastest growing economies – much of its population cannot afford the high-end luxury brands.

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