Big retailers unfazed by inflation

With inflation hitting a three-year high of more than seven per cent, Indian consumers are feeling the consequences. Grocery items have become more costly. Prices of vegetables, pulses, rice, wheat, milk and other food items are skyrocketing. So, this rise in inflation is gradually eating into the common man’s monthly budget.

 

Finance minister Palaniappan Chidambaram has blamed the inflation on a ‘relentless increase’ in global crude oil, commodity and food grain prices. Also, there is a growing imbalance between demand and supply in the country, which is one of the reasons behind this inflation.   

 

The government has already withdrawn incentives on the exports of at least 40 items including steel, cement and non-basmati rice. It has cut import duties on different varieties of palm oil and raised the minimum export price for non-basmati rice from $ 650 (approximately Rs 2,600) per ton to $1,000 (approximately Rs 4,000). Also, import duty on steel price has been scrapped along with custom duty on crude edible oil. Government has banned, to the disappointment of industry, the export of edible oil.  Exporters’ general view is that this step could have been substituted by importing cheaper vegetable oil since the oil exported is of premium quality. The common man is already feeling the heat. Surely, inflation is woe to them.

 

But, what do the big retailers think? They, apart from daily items, sell electronics goods, consumer appliances, apparel, furniture etc. Andrew Levermore, CEO of HyperCity, conveys, “In our business, price offer to the consumer has been increased by an average 6.4 per cent. However, our consumer is in the upper sector and is choosing a slightly more expensive basket than last year’s. Consequently, average selling prices of items purchased are up by 7.6 per cent. Ironically, there are some areas of the business like electronics that are experiencing dramatic deflation in selling prices.”

 

The situation cannot dissuade the company from going on with its expansion plan. Five stores are coming up within the next eight months. Ram Chandra Agarwal, Chairman and Managing Director of Vishal Retail, informs, “We’re in value retailing. In this category, demand is inelastic and we’re dealing in necessary items. Irrespective of high inflation, consumers are buying these products.” The company will go ahead with its plan to acquire 10 million sq.ft. of retail space and set up 500 stores across India by 2011. 

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