Marketing
food and grocery retailers in India and they generate revenues of well over USD 200 billion each year. More than 40% of these stores sell fruits and vegetables. That is why they are the undisputable leaders in food and grocery retail. Mandis, Kiranastores, and Street hawkers are the ones who are and have been selling fruits and vegetables in India since ages and know the business in and out. They are a one-stop destination for the needs of an average household and what’s more, most traditional retailers nowadays have home delivery facility!
Goli Harish Shankar PGDM 2011-13 NMiMS Hyderabad HUL’S Rural Market Distribution
But with growth of organized retail in fruits and vegetables sector, the scenario in urban India is changing. These retail outlets are springing up everywhere and this is definitely having an impact on the business of traditional retailers. But most of the populations still lives in rural India (70%) for whom purchasing fruits and vegetables is still a matter of going to the farmers directly. Moreover, the Indian mindset that products being sold in big and flashy stores are bound to be a tad more expensive than those sold by the traditional retailers is limiting the profitability of such modern stores. Most of the big retailers such as Big Bazaar and Reliance fresh have been loss-making ventures untill now and would require some time before they become profitable. Till then traditional retailers will rule the fruits and vegetables market.
Urban market in India is getting saturated, thus FMCG companies are now targeting the rural markets. Though there is an income imbalance between urban and rural India, rural area holds great potential as most of India's population lives there. Due to recent Government measures such as waiver of loans, national rural employment guarantee scheme, the disposable income in rural India is rapidly increasing. But rural markets present their own sets of problems including poor infrastructure, lack of education, and a very ineffective communication. Retailers cannot be present in all the rural areas as many of these areas are very small. Rural retailing in India accounts for INR 1.9 Trillion with about 7.8 million retail shops out of a total 18.9 million in India. It has doubled over the last decade. It is moving forward at such a rate that it is seen as a booming area in the Indian retail landscape. As a result, distribution to these markets is seen as the real game changer for FMCG majors and HUL is going full fledged to track it. It created an indirectly caused 6.4 million reach in HUL’s distribution model, and HUL is going all out to touch India’s untapped rural goldmine. Presently, HUL has a direct reach of about 1million and plans to increase its reach by expanding project Shakthi to small villages and small towns. Project Shakthi launched in 2001 consists of the Shakti Entrepreneur program which creates livelihood opportunities for underprivileged rural women. HUL’s women employees form self-help groups to sell their products. These women termed as “Shakthi Ammas” sell HUL’s products directly to consumers and retail shops. HUL trains them to communicate and sell its products in villages. The idea is to reach villages with less road connectivity and where media penetration is poor. This microenterprise offers low risks and high returns. The products distributed are some of the country’s most trusted brands
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iNM - Magazine