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Aashwi Verma IIM Ahmedabad Fruits and Vegetables Retail: Indian Scenario
The Retail Industry is one of the fastest growing sectors in India today. The retail market in India is estimated at USD 470 Bn in 2011, which accounts for roughly 35% of GDP and is expected to grow to USD 675 Bn by 2016 with a CAGR of 7.5%. The biggest share of the retail pie belongs to the food and grocery segment, which amounts to roughly 70 %. But the most significant fact about retail in India is that only 3% of it is organized as compared to the US, the UK, Japan where 70-80% of the market is organized.
The Indian retail sector is at crossroads today. There is an apparent shift in the Indian retail from Unorganized to Organized retail like in many other developing countries. Particularly in fruits and vegetables retail, there is an emerging trend of large corporate houses entering the business. But Marketing of Fruits and Vegetables is not as easy as other food products. It is quite complex as well as risky because of the following product characteristics: • Perishability • Seasonal production • Bulkiness Factors such as lack of proper infrastructure for storage, scattered production, price asymmetry and improper grading mechanisms make the market even more complex. There is a high demand for fruits and vegetables in the market because of the nutritional benefits they offer. The sector is completely driven by consumer choices and there is a high demand pull for fresh, high quality raw as well as processed food products. Factors such as growth in disposable income, improving living standards and growth of Indian middle class are also responsible for the increasing demand of fruits and vegetables. Food and grocery Retail:
The Organized food and grocery market is estimated at USD 9bn in 2011 and is expected to grow to USD 34Bn by 2016 at CAGR of 30%.
Organized retail: Nilgiris was the first organized food retailer in India. It started its operations in 1905 as a dairy farm in South India. Safal was the first organized fruits and vegetables retailer in India. It was established in 1988 by National Dairy Development Board and operates primarily in New Delhi. With time other corporates also entered the fruits and vegetables retail sector and currently, Reliance (Fresh), ITC (Choupal Fresh), AdityaBirla Group (More), Future group (Food Bazaar) and Bharti (Easy Day) are the major players in this market. With a number of corporate houses entering the market, there is bound to be an impact on traditional retailers i.e., street hawkers and neighborhood stores who sell 97% of food and groceries today. Their profits are expected to decrease in the future due to the increasing competition in the market. But the traditional retailers are not the only stakeholders in the game. The producer - the Indian farmer’sfuture is also at stake with the increasing entry of
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(Technopak Analysis, 2011)
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