It seems that Govt. is indeed serious about abolishing MRP (Maximum Retail Price) Laws of the country.
As per latest reports coming in, Govt. has exempted single-brand retailers from printing MRPs of each and every product. Instead, they are now supposed to print rack-wise labels of the products, which means that indirectly, they are now free to print different labels for different locations, for the same product.
Hence, in a way, single-brand retailers are free to charge anything they want, and there is no MRP rule for them, according to which nothing can be sold beyond the printed MRP.
Interestingly, multi-brand retailers are not happy with this decision.
In their defense, single-brand retailers and analysts are stating that ultimately, consumers would be benefitted.
What is the truth here?
MRP Rule Relaxed For Single Brand Retailers
Single brand retailers are Ikea, which recently opened their first store in India, and Nike, Adidas etc are no longer required to follow the MRP rule for each and every product sold inside their store.
Govt. has announced a major exemption for these brands, thereby giving them more flexibility to ‘choose’ the price they want to sell a product.
As per an order issued by Legal Metrology Division, it was said, “Retail sale prices of the products in a store will be displayed through labels fixed on the racks.”
Besides, barcodes on these products will be there, which will have the new price, as per the location and the availability. The order said,
“Additionally, the prepackaged commodities for sale shall contain bar codes on the principal display panel, which will show the retail sale prices by using the scanners available across the store..”
Ikea, which spends nearly 7 crore per store on labelling cost alone for every product, was happy with this news.
Patrik Antoni, deputy country manager of Ikea India said,
“Removing the MRP requirement on label for packaged products is a positive step by the government towards establishing modern retail practices. This will allow a more integrated way to communicate price in a multichannel environment.”
The new order also mandates all businesses (single brand and multi-brand) not to escalate the price of any imported product or a product which has been assembled in India, at the end of its life-cycle.
But.. Multi-Brand Retailers Are Unhappy!
Kishore Biyani, CEO of Future Group, which runs India’s one of the biggest multi-brand retail outlet Big Bazaar was not happy with this decision.
He said that such distinction between ‘single’ and ‘multi’ brand outlets doesn’t exist anywhere in the world, and the rule should be same for all.
In a statement, he said,
“The distinction between single-brand and multi-brand retail does not exist anywhere else in the world,”
Most probably, they are disappointed, because they will need to spend that extra money to label each and every product, which has become a law especially after the GST implementation and after complaints came that some retailers are overcharging customers.
A National Anti-Profiteering Authority has already been established, which can cancel registration of any business, if they are not following the MRP rules.
But, the rules are changing fast it seems.
Some Retail Experts have expressed confidence that removing MRP rule for single-brand retailers will eventually help the customer, as the price will go down.
Arvind Singhal, founder of retail consultancy Technopak said,
“Instead of MRP, companies should ideally be mentioning recommended retail price (RRP). Then, retailers can vary the price according to, let’s say, the location of a particular store. A store in a posh locality with higher rentals can charge more for a product compared with a store in a rural area. Currently, companies hedge the overall production cost and calculate an average as MRP.”
This clearly goes in line with earlier report, wherein we had said that Govt. may soon abolish MRP system all together, and introduce a new regime for pricing and labelling products.
Will it eventually benefit the customer? Or will it help retailers to make more profit?
Do let us know by commenting right here!