INDIAN FOOD RETAIL STORY IS A HIT

The Indian organized retail growth is the talk of the hour today, apart from every obstacle it’s growing 49.73% annually with a penetration of 8%, which was 1% in 2006 and it is expected to go up to 25% till 2011, which is a unbelievable figure and that’s why it is the most attractive market for last three years according to AT Kearney’s. In this growing retail segment the biggest share holder is the food industry which is nearly 75% out of that 14% belongs to organized sector and why it should not be, India’s population are worlds second highest, out of that population most of the people are young and having 20-30% disposable income which they like to spend on food mostly and other reasons like changing life style, increasing women working population, nuclear family in urban sector etc. The main reason why it is growing so fast is due to experiential marketing with a price conscious nature that it provides.
Traditionally the food retail is dominated by local kirana stores who sell dry foods and pushcart vendors who sell fruits and vegetables as it was protected from foreign players for long years. This scenario will be clear if Indian scenario will be compared to our neighbours, share of organized sector in Malaysia is nearly 50%, Thailand 40%, Philippines 35%. Also another major difference we found is the consumer consumption pattern, people here prefer more freshly cooked food rather than packed foods due to reasons like dietary patterns, low penetration of refrigerators, family structure are the primary reasons. Coming to rural segments the rural segment is worth US$ 45 Billion market by 2010 and it’s expected to grow at 36%.
So there is a need of understanding of changing pattern and trends in consumer behaviour and the future challenges for retailers. Impact of foreign retailers on Indian and analysis of the industry closely.

The factors why Indian consumer are heading for a change in there buying behaviour-
- Growing number of nuclear families, with male and female both working, changed the food preference of the family. Now they prefer packed food rather cooked food.
- Consumers are now more urban and more conscious for healthy and hygienic foods so this may go for packed foods.
- Due to lack in time consumer may prefer more shelf life packed food available in super markets.
- Convenience, large product line, quality and availability may result in shift from unorganized to organized retailing.
- Changing family structure, westernisation, up word trend in use of credit cards made it a attractive place for supermarkets.
- Increasing number of middle class families and increasing number of mortar cycle users is another reason for changing in buying pattern.

The above are about the changing consumer behaviour and in bellow I will be telling about what the benefits consumer are really getting from the organized food retailing-

- Now the Indian consumer is going through a transformation, they are now getting better shopping experience.
- Low price, easy accessibility and fresh vegetable is the main reason for heading for retail shops.
- New definition for retail shops like family outing and recreation centres for busy couples, so they can shop and spend time together.
- Multiple service and product under one roof.
- The friendly nature and behaviour of staffs made the shopping more lively for Indian consumers.

The above was all about the consumers of India what is there perception and the benefits they are going to get out of the deal then what about the Impact of foreign players on Indian retail industry –

As we know Indian market is a very lucrative market after all so all foreign players will be interested to enter it, this will open up new opportunities -

- Due to foreign players entrance efficient supply chain method will be practiced so that the gap between prices receive by farmer and price paid by consumer will be decreased. Benefit for both.
- Indians almost pays 4-5 time more than farm-get price compared to in developed countries consumer pays only 1.5 times more.
- Productivity gain will generate more employment and more income opportunities.

The foreign player entrance may close up so many opportunities in the industry like-
- Due to entrance of big giants small players will be pushed out of the business.
- Also it is seen that the big retailers are the main reason for down in wages.
- Also may lead to creation of monopoly condition where there are one or few buyers.
- Farmers may be pushed to produce single crop with the help of genetically modified crops which may kill the fertility of land.
- Following trend of big giants where bottom employs get salary bellow poverty level and top ones get millions may increase the division between haves and have not.
- Big players more prefer cheap source of goods from china, Thailand may lead to unfair competition and loss of livelihood in India.

As a retailer student I should analyse the industry so that organisation may use it in there strategic planning process, so there is a need of a SWOT analysis-
Strength of Indian retail food sector –
- Latest technology kept organized retailers one step ahead of unorganized once, like the use of cold chain process helps retailers to deliver foods fresh.
- International players experience in this field of supply chain process and technology is an added advantage.
- Shifting affinity towards supermarkets of young Indian consumers is another advantage.
- Efficient use of supply chain made big retailers to supply foods at very cheaper compared to unorganized once.
Weakness of Indian retail food sector –
- Stand alone shops were established long time back and have large loyal customer base. New giants are just appearing now, they need to settle dawn, expand and grow.
- Trained man power shortage is another disadvantage, its time taking to train and retain them.
- Real estate is another barrier which will add more cost to the operation finally, which retailers have to tackle.

Opportunity of Indian retail food sector –
- Indian food retail segment is nearly 75% of all, out of that organized one is nearly 14%. So huge gap is left to fill up.
- Changing consuming pattern of people.
- Growing potential of tire II & III cities opened up new opportunity.
- More disposables income made people to spend more basically on food.
- FDI allowed in single brand retailing up to 51% made a huge opportunity.
- Growing economy in rural sector and still it is untouched by big retailers is the future potential opportunity for all.
Threat of Indian retail food sector –
- Unorganized once are getting together to fight big giants.
- Shopping culture is just new for Indians.
- Indians mostly prefer cooked food rather packed and there is a huge need to bring dawn the packed food price to make it affordable to all.
- Lack in retail space and high real estate price is making a tough task for big giant.
Conclusion-
To sustain in the growing food market of India retailers have to look up on basic two factors – infrastructure development and change the mindset of people. Many people still think it’s expensive to shop in a air-conditioned room. The 70% rural Indians also need to be catered instead of concentrating on urban India. Also need to take feed back from consumers seriously, some complains coming frequently about food segment is the foods available in big retail units are not fresh, this factor made a way for unorganized retailers to come back and so many are coming back . The cold chain System has to be efficiently operated in India to supply fresh vegetables daily. Once these factors will be taken care nothing can stop organised sector growth.

SOME PLAYERS WHO IS PLAYING-
1. Pantaloon
2. Reliance Retail
3. Subhiksha
4. Jubilant Retail
5. RPG group.


SAMBIT KUMAR SAHOO
RETAIL, SCMS-COCHIN
PH- 09995218696