As E-Com Companies Give Higher Discounts, Kishore Biyani Is Charging Customers To Enter His Stores

Kishore Biyani sure does things differently.

As e-commerce companies are falling over each other to give the greatest possible discounts and attract the most shoppers, he’s gone to the other extreme — Future Group’s Brand Factory outlets will charge people to enter their stores. During Brand Factory’s five-day promotional campaign running from 22nd to 26th November, customers will have to shell out a fee between Rs. 100-Rs. 250 to enter the store. Brand Factory says customers will be more than able to make up their entry fees — it’s offering purchases with MRPs amounting to Rs. 5000 for just Rs. 2000.

kishore biyani

“It is to encourage serious shoppers, and bring exclusivity to their shopping experience,” said Biyani about the move. The fee will likely also help with logistics — unlike e-commerce compnies, retail stores can’t fire up a new server to cater to additional demand. “Last year, there was chaos and we couldn’t service all customers,” said Suresh Sadhwani, business head at Brand Factory commented on the entrance fee. “But now, we hope to limit the customers and curate the footfalls better,” he said. 

It’s unusual for a retail chain to charge customers for the privilege of entering its stores — it might even be the first time such a tactic has been adopted in India — but it could be a clever strategy. In an environment where companies across the board are offering attractive discounts, Brand Factory’s offer will make people sit up and take notice. And while Econ 101 says a rise in prices lowers demand, it can also serve the exact opposite function — it can signal to customers that the discounts on offer inside the stores are truly exceptional, and thus deserving of an entry fee.

And Brand Factory’s shopping events are serious business. Last year, the company had served 12 lakh people during a similar three-day shopping event through its 50-odd stores across the country. The event had raked Brand Factory sales of Rs. 115 crore. This time, the company will hope to better its previous performance, notwithstanding the entrance fee.

Biyani’s moves might be unconventional, but they seem to be working. As e-commerce companies are bleeding money through discounts and promotions, the Future Group seems to be doing alright — its quarterly profits have doubled, and its stock is up nearly 400% since the beginning of the year. 

 

future retail stock price

 

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