Online vs offline: More regional retailers likely to ask for price parity

The demand for parity in product prices for online and offline channels by brick-and-mortar store chains may not be restricted to a small pocket. After Chennai-based retailers, including Viveks, Girias, Shahs, Sathya, and Vasanth, wrote to durables companies recently to rein in differential pricing, chains in other parts of the country may also do the same, said top industry sources. These include retailers like Kohinoor and Snehanjali in Mumbai, Sales Point in Ahmedabad, Great Eastern in Kolkata, and Sargam in Delhi.

The chains were not immediately available for comment. But the trigger for the widespread discontent among offline retailers this year has been the multiple waves of shopping festivals organised by e-tailers during the Dussehra-Diwali season, a crucial period for the retail industry in the country.

Amazon organised three waves of online sales in October-November, while Flipkart had two, offering steep discounts on mobile phones, television (TV) sets, and appliances.

“Over the years, we have seen the entire mobile business shift online. Now TV sets and larger appliances are also being sold online. Multiple rounds of online sales in October-November further compounded our woes. There were barely any walk-ins at stores this year,” said a top retailer from Mumbai.

A RedSeer report last month said online shoppers during the festive season this year increased 71 per cent over last year, touching 24 million. Mobile phones and electronic goods contributed 80 per cent of the total gross merchandise value this festive season, lending heft to the concerns raised by offline retailers.

“The chains have not written to Consumer Electronics and Appliances Manufacturers Association (CEAMA). They have instead written to companies individually. If they approach us, we may consider taking up the matter with the government asking for a policy framework on the matter,” said Kamal Nandi, business head and executive vice-president at Godrej Appliances and president of CEAMA.

Companies privately admit that while they do ask e-tailers to maintain parity in terms of price, it becomes difficult to monitor the same. “Boycotting the online channel is not an option for manufacturers. They are an important distribution channel. Companies today have separate teams and even products for the two channels. But keeping tabs on pricing is difficult,” said a top executive of a Delhi-based electronics company.

The government is already looking into the issue of predatory pricing, deep discounting, and loss funding by e-tailers in a bid to provide a level playing field. Smaller retailers and traders under industry body Confederation of All India Traders are also mounting pressure on the government, with a massive rally slated on Wednesday in the national Capital aimed at conveying their concerns loud and clear.

Praveen Khandelwal, secretary general, CAIT, said meetings over the course of one month had been held with officials of the commerce ministry and the Department of Industrial Policy & Promotion and that the body would continue to be vocal on the issue in the coming weeks.

 

Online vs offline
 

• The demand comes as discontent over multiple shopping festivals organised by e-tailers grows
• Companies say there is little they can do to control discounting on online platforms 
• Offline retailers are asking for a policy to regulate deep discounting and predatory pricing by e-tailers