Subhiksha targets Coimbatore for expansion  ( January '18,2001, HBL)

SUBHIKSHA Trading Services, promoters of the Subhiksha supermarket and pharmacy chain, is on a major expansion drive in Coimbatore. The retail store chain has chalked out a major expansion strategy of setting up one outlet within every three-four km stretch in Coimbatore.

The company, which has opened 53 retail chain stores within Chennai itself since its inception in 1997, is opening 24 more in other cities in Tamil Nadu. This includes five in Coimbatore alone, besides five outlets each in Madurai and Tiruchi, three in Salem, and one each in Erode, Kalpakkam, Vellore, Tiruvallur, Arakonam and Chengalpattu. It may add seven shops to the list. But Subhiksha has not positioned itself against established players like Nilgiris or FoodWorld in retail marketing, who have set up air-conditioned outlets.

Rather, it aims to make its aggressive pricing strategy its brand equity against the neighbourhood grocery shops. Mr K. Balasubramanian, Manager, Subhiksha Trading Services (P) Ltd, Chennai, told Business Line , ``The company is emulating the worldwide trend of garnering the benefit of organised retailing by efficiencies and economy of scale, which in turn brings down the cost to the consumer.''

Apart from the entire range of branded grocery and cosmetic products, Subhiksha retails medicines at lower prices. In fact, this aggressive pricing of medicines drew strong protests from organised pharma traders. The company was forced to approach the Supreme Court to ensure that its rights were protected and is able to procure and sell medicines at discounted rates to ``Subhikshites''. Explaining how his company was able to sell at a substantial discount to the MRP in spite of its overheads and investment in technology, Mr Balasubramanian said this was possible because of cost-cutting and elimination of waste wherever possible. Besides, it was able to offer sizeable discounts due to its bulk-buying strategy.

He said Subhiksha believed that low margins and high turnover was better than high margins and low turnover. Even top retailers such as Walmart, Metro, Tesco and Carrefour believed that low unit margins (therefore, low unit prices to customers) and high turnover are the ways to succeed in a very competitive environment, he said, adding that Subhiksha was the relevant model in Indian context. Mr Balasubramanian said his company efficiently operated on thin inventories and information technology.

However, Subhiksha does not offer its customers the freedom to browse and shop like Nilgiris, FoodWorld or Vitan retail chains. Justifying Subhiksha stand of not adopting this method, Mr Balasubramanian said the system might be relevant when it came to buying jewellery or clothes. For buying cosmetics or grocery, customers look for a quick purchase rather than the shopping pleasure, he said. Therefore, Subhiksha does not view this as a handicap. He said Subhiksha positioned itself as a destination store for the ``value-conscious'' customer.

``It is a functional and transaction-oriented shop that has no room for unnecessary frills and ambiences,'' he added. On the limited choice for buyers in any particular product range, Mr Balasubramanian said the company stocked two-three most popular brands in each category as was common with international discounters. This anyway constituted about 95 per cent of sales even in stores stocking larger number of brands. The idea, he said, was to stock fast moving brands and not those that had limited appeal. This also helped the company manage an inventory logistics and supply chain as also in offering lower prices. He said the chain was ``sensitive to customers' needs'', constantly adding or removing products based on customer feedback.