Page 44 - DMGT550_RETAIL_MANAGEMENT

Unit 3: Types of Retailer

the processing sector is still in its infancy. Even with less than 4% processing of fruits and Notes
vegetables, the Food Processing Industry sector in India is one of the largest in terms of production,
consumption within India, export and growth prospects. The government has accorded it a high
priority, with a number of fiscal reliefs and incentives, to encourage commercialisation and
value addition to agricultural produce; for minimising pre/post harvest wastage, generating
employment and export growth. As a result of several policy initiatives undertaken since
liberalisation in early 90’s, the industry has witnessed fast growth in most of the segments. In
the following few paragraphs, it can be noted that the processed food market for India is vast
and the amount of scope that retail chains would be exposed to is phenomenal taking into
consideration the demographics and raise in standards of living. Retailers could throng the
market with all these processed and packaged foods with their private labels.
With the emergence of the big private corporates, NGOs (Non-Government Organisations) and
Government organizations into the food processing scene, India is making big inroads into the
Food Processing Industry. These corporates and NGOs have reached out to the farmers and
provided them with timely advice and help in the upgradation of farm practices with valuable
inputs on various areas of farming from sowing to harvesting which includes quality seed
procurement, manures, fertilizers and pesticides etc. Some of the successful models are that of
ITC’s e-choupal a model that helps the soyabean farmers in contract producing for ITC for its
commodity trading business. The PEPSI experimenting with Punjab farmers in growing the
right quality tomato for its tomato purees and pastes. Some of the leading food retail chains
working with farmers for contract growing greens for supply to their retail outlets etc. These
successful models are being replicated with required changes all over the country and the food
industry is getting integrated more strongly.

India has also seen a flurry of food chain majors like McDonalds, Pizza Hut and Kentucky Fried
Chicken finding their place among the Indian consumers. The trend still follows for food chains
in India to spread to almost all cities and towns.
These advancements have revolutionised the integration of the Indian Food Industry and has
played a vital role in solving, to a large extent, major supply chain issues that prevailed. The
trend is that these successful institutional intervention models be replicated and spread in all
segments of the food industry far and wide through the country that benefit all the incumbents
of the chain evolve. This finally helps the retailer as his supply chain becomes much leaner and
vertically integrated. He is in a position to offer a wide variety and highest degree of convenience
to his customer.

Economy

Economic growth at over 5.5% over the last eight years, forex reserves of over $100 billions and
a stable government has helped India to look more progressively towards future. The economic
development was largely attributed to its dominance in the Information Technology Sector in
the global market place and its large English speaking population that made it the ideal choice
for back office operations for MNC’s world over. The manufacturing sector also provided its
might to the economic development by going global hitherto restricting to export of raw
materials or intermediaries that has not graduated to supply of end product be it Pharmaceuticals
or Consumer Vehicles. All this has translated in higher income levels and more surpluses for
the middle class segment that is getting ploughed into the retail sector; again fueling the economy
to higher levels. The last five years have seen the PPP of average Indian middle class (over 300
millions) go up several times unleashing the power of purchasing. The retail sector was the
greatest beneficiary. The need for a shopping experience combined with the convenience of
shopping for the upwardly mobile middle class has been on the major factors for retail boom in
India.

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