Reliance Retail adopts Wal-Mart's pricing policy

KOLKATA: Mukesh Ambani-controlled Reliance Retail, which is giving shape to its grand plans to roll out a chain of 500 hypermarts over the next five years, has drawn up an aggressive pricing strategy. The company claims it will sell its entire range of merchandise from these hypermarts at nearly 15-20% below existing retail market rates.

Reliance’s hypermarts, christened ‘Reliance Mart’, will deal in a range of products across categories. These include FMCG, agri-products, grocery, home solutions, footwear, apparel and accessories, jewellery, books, consumer durables, car accessories and technology/electronic gadgets. The special prices will be applicable for all these categories.

When contacted, a Reliance Retail spokesperson declined to comment on Reliance Mart’s upcoming pricing strategy. An industry source close to the developments said “Reliance has decided to adopt the ‘EDLP’ pricing strategy for the Reliance Mart chain”.

In retail parlance, EDLP means ‘Everyday Low Price’, which means consumers will enjoy the same low price every time they visit the store across the year. Global retail biggies like Wal-Mart, UK’s Asda and Australia’s Woolworths have been key exponents of the EDLP strategy.

Reliance will follow the EDLP strategy for its slew of private labels as well as associate brands (those owned by other companies) which will be sold through hypermarts. It is tying up with companies directly to procure the merchandise, thereby bypassing the various supply chain layers. This will ensure much greater control on the margins and offer attractive pricing for consumers.

Retail analysts claimed Reliance’s hypermart pricing strategy will fuel the company’s growth, swipe consumers from competitors and may unleash a price war in the organised retail sector. Retail circles claim there are no existing domestic hypermarket retailers who have adopted the EDLP strategy in practice.

It is well known that Reliance Retail will launch the first ‘Reliance Mart’ in Ahmedabad this month, while the second is scheduled for opening in Jamnagar by October. Each of the Reliance Mart store will be spread over 1 lakh sq ft to 1.5 lakh sq ft.