Page 34 - DMGT550_RETAIL_MANAGEMENT

Unit 2: Retailing in India

pricing is a function of the volume that the store generates. It gets close to a million Notes
customers a year. The throughput in a store ranges from ` 20,000 lakh to ` 17 crore a
month. It has plans to touch the ` 1000 crore figure by the year 2003-2004. Says Pillai,
“From humble beginnings, today FoodWorld has 12 outlets in Chennai, 14 in Bangalore,
9 in Hyderabad, 4 in Pune, and 2 in Coimbatore. It occupies a total retail space of 100,000
sq. ft and has additional 100,000 sq. ft of warehousing facility. Not content to sit on its
laurels, FoodWorld has chalked up plans of setting up 100 stores by December 2000. But
instead of venturing into new cities, FoodWorld will consolidate itself in the already
existing locations.
Normally groceries, food, and vegetables is a low interest area. So building a brand is
much more difficult. To generate and retain interest, FoodWorld runs a host of contests
and promos. It has a 52-week promotional calendar with a variety of schemes to attract
consumers. Pillai says, “At any given time, there are 150–200 products at a certain level of
discount.”
The layout of the store is designed keeping convenience in mind. For example, pulses are
kept at the front, rice at the back, while vegetables to be kept on top. The execution enables
vegetables on the top of a basket during a purchase. FoodWorld sources most of its
branded groceries from traditional C&F agents, rice from the rice mills, fruit and vegetables
from the neighbouring villages or the mandi.
Some of the problems encountered are assessing the best location, attaining economic
viability and leveraging synergies. As all volumes are aggregated in the state, generating
large enough volumes to leverage it as an advantage is a difficult task. The infrastructure
of cold chains and basic infrastructure is missing. Getting trained people to man, the stores
has proved another challenge. FoodWorld has the largest number of employees from
government and municipal corporation schools.
In India, on an average, there is one retail outlet per thousand people. The industry is
poised to grow at 5–10 per cent per year over the next 25 years. But to grow at this rate,
retail has to grow across all categories of the spectrum.
Question

What external factors FoodWorld exploits to ensure successful existence and expansion of
its retailing activities?

Source: A & M, September 30, 2000

2.9 Summary

 As per the definition retail industry comprises of organized and unorganized sectors.
Corporate retailing refers to trading activities undertaken by licensed retailers, that is,
those who are registered for sales tax, income tax, etc.
 Unorganized retailing, on the other hand, refers to the traditional formats of low-cost
retailing, for example, the local kirana shops, owner operated general stores, paan/beedi
shops, convenience stores, hand cart and pavement vendors, etc.
 About 47% of India’s population is under the age of 20 and this will increase to 55% by
2015. This young population which is technology savvy, watch more than 50 TV satellite
channels, and display the highest propensity to spend, will immensely contribute to the
growth of the retail sector in the country.
 Due to the couple earning most of the housewives likely to spend their valuable purchases
at hypermarkets because of entire products available under one roof.

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