Deep Discounting Is Breaking India's Consumer Brand Tiers
Modern retail and quick-commerce platforms across urban India now routinely offer household essentials at discounts of 20-40% below the Maximum Retail Price printed on packaging. This widespread practice over the past 24 months has created pricing dynamics that threaten the carefully constructed brand hierarchies of consumer goods giants.
The pricing power once wielded by manufacturers has fractured across competing retail channels. Hindustan Unilever's tiered brand strategy – placing washing detergent Surf Excel as premium, Rin as mid-tier, and Wheel as entry-level – now faces situations where platform-specific discounting inverts these relationships.
In many instances, Rin's list price exceeds the actual selling price of supposedly premium Surf Excel, undermining decades of brand positioning.
"With increasing penetration of modern retail and e-commerce, we see more products being sold below MRP, at the discretion of retailers or in partnership with retailers," said CLSA analyst Aditya Soman. "We believe this has an impact on pricing power for brands, increasing pricing complexity and overlapping price ladders across channels."
The discounting patterns vary significantly by category and retailer. In detergents, discounts reach up to 42% on platforms like DMart Ready and Zepto Supersaver. Premium toothpaste variants from Colgate receive approximately 13% discounts online while mass-market offerings maintain full pricing.
If you're an investor in Indian consumer staples, you'll want to pay attention to these shifts. Home and personal care companies in India have historically commanded the highest EBIT margins among global fast-moving consumer goods – a premium built on consistent pricing and favorable terms with traditional retail.
CLSA says each percentage point of sales migrating to organized retail not only reduces realized prices but converts occasional promotions into permanent margin pressures.
DMart, Zepto, Blinkit and Instamart all maintain steeper discounts than neighborhood stores while growing their gross value. These price reductions serve dual purposes: customer acquisition and development of elasticity models that inform future strategy, including private label development.
Rural India – still predominantly served by traditional retail – continues trading near official prices, providing temporary shelter for brand manufacturers. However, this divergence may prove temporary as smartphone and e-commerce penetration increases beyond metropolitan areas.