Franchise Talk

Destination India: M&S Plays The Pricing Game

July 6th, 2009 | Author: Jack

Just three days ago, Marks & Spencer (M&S) announced in the UK that it would pass on higher business costs to consumers by raising prices by 3 per cent later this year.

Its Indian arm is, however, doing exactly the opposite.

UK’s leading apparel and toiletries retailer, which owns a 51 per cent stake in a joint venture launched in April last year with Reliance Retail, has already cut prices by up to 20 per cent in categories such as menswear to woo buyers.

The average price cut in the summer ranges is 12 per cent. And Mark Ashman, CEO of Marks & Spencer Reliance India (MSRI) says the company will continue to lower prices this autumn, allowing it to offer great value to customers.

Ashman says this is part of the retailer’s efforts to “Indianise” itself. “We have realised that in order to be successful, we have to localise ourselves. We would have done good business even otherwise, but we can do much better with these changes,” he says.

Right-pricing is a favourite word in Ashman’s lexicon, partly by compulsion. The retailer used to import its products from Europe earlier and the high import duties of around 40 per cent on apparels ensured that the price tags were high. So sales were sluggish, prompting the company to tweak its strategy to become a mid-market retailer in the country.

So local sourcing, mainly from India and Bangladesh is in. The company wants to increase the percentage of such sourcing to 70 per cent in the next five years compared with 40 per cent now. Last summer, it was just 20 per cent. Read on.

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