Food &Groceries (F&G) Retailing:

Fast, Growing, Revitalizing India’s tail (dead/lost) business sector: Agriculture

“I no longer buy fruits & vegetables from street, when it is available at cheaper price with excellent ambience- with ACs, attractively shelved wares & half dozen uniformed assistants to attend on customers, specially now when temperature is scorching,”. Customer (50, Delhi)

According to the Indian retail report 2007, F&G business offers a beguiling prospect & estimates that retail pie was worth Rs 12 lac crores in 2006 with F&G accounting for 63% share.

According to CRISIL report, F&G share in retail was 74% in 2006. However, F&G accounts for a meager 18% of total ORS (organized retail sector).

India is second largest producer of fruits & vegetables (15% & 14% respectively) after china -34%.

The growth trend of following horticultural crops in India shows that F&G retail is not a fad. It’s a positive symbol for Indian farmers & agriculture industry which was dragging with only 2-4% growth in last years.

New INDIAN entrants in F&G retail are:

Agriculture ministry has taken cursory interest in this sector & set up the national horticulture mission to give a needed thrust to “Farm-to-fork-model”.

Lots of initiative has to be taken to promote public-private partnerships as they ensure efficient resource utilization and better management practices. There are many examples of successful public-private partnerships.

Safal market in Karnataka is an instance of the modernization of wholesale markets. ITC's e-Chaupal, Haryali Kisan Bazaar, Mahindra Subh Labh, Cargil Farmgate Business and Tata Kisan Sansar, Godrej Agrovet has tactfully used its marketing experience in rural areas by opening advice centers called “Aadhar” are all initiatives of marketing distribution in the PPP format.

Factors responsible for F&G boom:

• Growing consumer base: Current consumer base is 217m people, 27% of population, equivalent to US population, by 2013 another 200mn will add in this productive population bracket.
• High Disposable Income & Urbanization.
• Middle class dwelling revamped & hectic environment etc
• New technological Innovations i.e. credit cards, Debit cards, online payments etc
• One stop shopping

Challenges:

• High cost logistics
• Infrastructure & power supply
• Wastage of fresh produce: nearly 30% of produce is lost due to poor logistics during transportation; which affects the prices of F&G & bear by the customers
• Protest of local vendors & retailers.

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Retailing Scenario

The time line of Indian economy resembles a chain reaction. Maybe it’s not just one reaction; but a combination of fissions and fusions. It started the IT&ITES boom, then Manufacturing boom, followed by the retail boom, now the rupee boom and finally retail boom. India has really gone all guns blazing.

Is it true?

According to the CEO of Retailer’s Association of India-“India will be among the top five economies in the world by 2025 and no marketer can afford to miss out on the India opportunity”.

According to the CII & Morgan Stanley report:

• Today, Indian retail market is worth Rs 10,00,000 crores ($235 billion) in which only 90,000 crores ($21 billion) is organized sector nearly 8.9% in worth but market size of its (organized retail sector is 3%).”
• In next 2 years growth rate of ROS (retail organized sector) will be nearly 20%.
• 2 million direct jobs in the next two years.
• 20 per cent of organized retail employees would become tax-payers.
• More than 50 per cent of the total employees in modern retail would be women.
• Retail contribution is 30% in GDP.

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