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Food Retailing in India

Dr. S.V. Warade

Assistant Professor
School of Agri-Business Management, Nagpur
Dr. PDKV,Akola
About Us
Indicator India Maharashtra
Geographical Area 32.87 3.08
(Lakh Sq Km)
Forest Area 7.74 0.61
(Lakh Sq Km)
Gross Cropped Area 1904.22 223.68
(Lakh Ha)
Irrigated Area 799.97 36.65
(Lakh Ha) (42.00% of GCA) (16.40% of GCA)
Cotton Area 83.54 28.26
(Lakh Ha)
Literacy 64.84 76.88
Sex Ratio 933 922
Percentage of Rural 72.18 57.57
Population
Indicator India Maharashtra
Live stock 4850.02 370.58
(Lakh )
Foodgrain Production 2278.80 123.45
(Lakh tonnes)
Working Factories 129.87 18.05
(Thousand)
Average Daily 84.54 11.62
Employment (Lakh)
Electricity 59445 6850
Generation (crore Kwh)
Electricity Consumption 38613 5568
(crore Kwh)
Number of Banks 72117 6797
Per capita Income (Rs) 29642 41331
Indicator India Maharashtra
Share of Agriculture in 17.80 13.70
GDP/GSDP
Export of Agri 10.30 % of total export

Import of Agri 3.90 % of total import

GDP/GSDP growth rate 8.7 9.0


(2007-08)
Agriculture GDP/GSDP growth 2.6 (18) 5.8 (13.70)
rate(2007-08) & Share
Industry GDP/GSDP growth 8.9 (26) 10.30 (28.09)
rate(2007-08) & Share
Services GDP/GSDP growth 10.7(56) 9.1(58.21)
rate(2007-08) & Share
• Nearly 600 million Indians depend on
Agriculture (54%)
– 210 million depend on Manufacturing
(19%)
– 300 million depend on Services (27%)
Concept of Retailing

• Retailing is the set of activities


related to sale of products and
services to ultimate customer.
• Skills of retailer
– Marketing skill
– Operating skills

• Retailer knows’
– Consumer behavior,
– Maintain equilibrium between manufacturers
and customers
– Manage shelf for various brands for
attracting and maintaining customers
– Retailer gives feedback about consumers ‘
preferences to manufactures.
Scope for Agri-based food retailing in India
• The food chain in India from the farmer to the consumer involves
several intermediaries leading to handling at multiple points and
longer transit time.
• Only 25% of the consumer’s rupees reaches the farmer as
compared to 50% in developed countries.
• It is estimated that 20% of the food produced in India is wasted.
This is valued more than Rs 50,000 crores approximately.
• This wastage is equal to the amount that the government spends
on food subsidy by more than 3 to 4 times.
• India produce a wide range of fruits and vegetables of both the
topical and temperate varieties because of the varied climatic
conditions in our country.
• India having around 4000 fruit processing units with an aggregate
capacity of more than 12 lakh MT (less than 4% of total fruits
produced).
• Unfortunately, around 2.20% of fruits & Vegetables are processed
as against 30% in Thailand, 70% in Brazil, 78% in Philippines and
80% in Malaysia.
• The wastage is estimated as high as over 25% of the total
production of fruits and vegetables.
• The cold chain system is primitive and under developed.
• The existing capacity of 1 million tonnes is primarily used for
storage of potatoes.
• The current method of forecasting of agricultural produce does not
provide for any time to take corrective action in terms of crop
failure or surplus.
Scope for Agri-based food retailing in India
• Only around 1 percent of India's annual meat production of over
4.5 million tons is converted to value-added products.
• Milk processing level is 35 percent, which is, 13 % in the
organized and 22 % in the unorganized sector.
• Out of the total production of bread, 40 percent is produced in
the organized sector and the remaining 60 percent in the
unorganized sector.
• Similarly, production of biscuits in the organized sector is about
80 percent and quantity of biscuits produced in the unorganized
sector is about 20 percent.
• Processing level of buffalo meat is estimated at 21 percent,
poultry 6 percent, and marine products 8 percent.
• India's share of processed food is about 1.6%.
Development of Food
retailing
• The first time the food retailing was seen in mid-eighties, only in the
few metro cities in India.

• Morning Stores and Modern Stores in Delhi,

• Nilgiri in Bangalore,

• Food Land in Mumbai

• Spencers Food Stores in Chennai.

• Prior to Food retailing the cooperative stores were working in the


major cities such as Apna Bazar in Mumbai and Kendriya Bhandar at
Delhi.
Classification of Food
retailing markets
• Product based
– Narrow and Deep Product Assortment
(variety) : one or few product category
and lots of variety
– Wide and Shallow Product Assortment :
lots of product with selective preferred
brand
– Hypermarket : cater bulk shopping in both
food and non-food categories.
• Location based : main market and residential
area.
• Price based : listed price or lower price.
Types of Food retailing
markets
Now days the various format of the Food retailing are
observed such as
• Supermarket(weekly, monthly and occasional needs) such as
Food World, Trinetra and NIlgiris.
• Hypermarket(cater bulk shopping in both food and non-food
categories) such as Spencer,
• Big Bazar(Pantaloons).
• Neighborhood stores(caters daily and weekly needs) such as
Mother Dairy , Subiskha.
• Cash and carry stores (products for members only) supply
both food and non-food items.
• Specialty stores
• Discount stores
Theories of Food retailing
markets
1. The Wheel of Retailing: price cut, location, provision of credit,
making home delivery of the product, advertising expenditure and
display and location.
2. Retail accordion: Wide range of products with more focused product.
3. Retail Life cycle: Retailing pass through birth, growth ,
maturity(achieve full potential) and decline. Decline occurs due to
over ambitious.
Strategies of Food retailing
markets
1. Retail Positioning: considering convenience of customers
2. Store location
3. Product Assortment: No. of varieties
4. Price
5. Promotion: discount, advertising, free gift
6. Store atmosphere: design, color, layout
Functions of Food retailer
1. Understand the customer
2. Respect the customer
3. Emotional connect: customers are emotional to taste, preferences, design
4. Convenience to the customer: avoid customer’s confusion, easy check out
5. Promotion: discount, advertising, free gift
6. Store atmosphere: design, color, layout
Factor Influencing the Food
retailing
The problem in food retailing sector is not the demand, it is the
supply of the processed and packed food items.
• The existing supply is concentrated on few items and its
branding and majority of the food item are not yet processed,
packed and retailed. There is need to supply of such product and
make the sector organized.
• The sector has some problems in development like
1. small land holding of the Indian farmers,
2. lack of coordination with processing and manufacturing firms,
3. lack of fund for manufacturers,
4. lack of skilled manpower, lack of quality products,
5. lack of consumer analysis and
Many more hurdles are seen in the development of the food
retailing sector.
The demand and supply gap for the warehousing is around 38
million tones.
Factor Influencing the Food
retailing
There are various factors changing the food retailing
sector in India such as
• changing life style, taste and preferences,
• growing need for convenience,
• increasing disposable income, increase in number of
working women,
• Changing consumption patterns,
• Impact of globalization,
• increase in application of information technology-credit
and debit cards.


Corporate Actions

• Major corporate houses such as HLL, ITC, Godrej and Reliance are
making revolution the retailing sector.
• These corporate firms are making forward and backward linkages
for giving best services to consumers.
• Escorts' sells tractors and harvesters for agricultural sectors and
diversified into agro sectors therefore is but a natural extension
• The PEPSI has started a venture on the production a particular
variety of seaweed which can be used of the jelly food, cosmetics
pet food and tooth paste.
• Global Agri-System has contracted with some cultivator in
Bhulandshahar for the production of European carrots.
Corporate Actions
• YES bank has identified some project for the production of quality
agricultural products.

• Jain Irrigation bagged the Rs 27 crores from dehydrated onion in


European retail market

• Citrus International, a swiss firm made MoU with Maharashtra


Marketing Department to the Rs.170 crores orange processing plant.

• Mahindra Shubhlabh has tied with Netherlands based HZPC for


potatoes.

• The MacDonald is running more than 150 outlets in India.


• The MacDonald is supplies its product to all over the world, out its
supplies two-thirds it supply in Indian outlets.
Research and implementation in
retailing
• Employee attitudes and behavior affect the customers’
satisfaction
• Customer need help in proliferation(selecting the unknown
product)
• Demand-supply need to be managed effectively to satisfy
the customer timely, with efficient supply chain
management.
• Stockout is dangerous for retailer and the expected brand
of the customers
• Trust between retailer and manufacturers helps in building
the relations for mutual benefit.
• It is Imperative to get real and timely data from retail
store for making decision of inventory and replenishment.
• Off- price retailer offer branded goods at affordable price.