Sunday, March 2, 2008

Formats in Organised Food retail

Contributed by Garima Dhamija
Traditional retailers have been unable to keep pace with the changing needs of consumers, thereby creating a large addressable opportunity for corporate players aspiring to enter the industry. Each retailer must identify and develop a strategy offering a compelling value proposition. Most existing formats have evolved to offer value propositions along price, convenience and specialization.
Organised Food Retail Formats in the Country
While food is the mainstay in terms of driving the traffic to the store, with larger stores, the products range can include a wide assortment of non-food as well. A view of a complete assortment of goods that may be carried by a hypermarket (and partially by a supermarket):
o Food and Grocery
§ Fresh and Perishables
§ Groceries
§ Health & Beauty/Personal products
§ Household needs
§ Liquor(where permissible)

The formats for organised food retail in India include the following:
  • Convenience Stores – 300-1,000 sq. ft. “corner shops” – focused on dry groceries and may also stock dairy products. The convenience store chains in India typically fall into two categories: neighbourhood stores, and petrol forecourt stores. The product mix in the neighbourhood stores is close to the mix in the local kirana.
  • Supermarkets – Supermarkets are a recent phenomenon in India. These are basically larger grocery and convenience stores located in and around major cities. While internationally their size ranges between 5,000 and 20,000 sq. ft., in India they are typically 1,000-5,000 sq. ft., located in high street locations or in residential areas – typically dry grocery, wide range of food products, and dairy products, limited range of fresh produce. (A number of cooperative retail chains also follow a similar format.) These are typically self-service stores stocked with a wide range of Indian groceries, snacks, processed food, confectionary, personal hygiene, and cosmetic products.
  • Hypermarkets – typically 50,000-120,000 sq. ft. in size – in addition to food, the hypermarket format includes a credible variety of non-food products. A variation of the hypermarket format is the “cash-and-carry” which is focussed at trade sales (i.e. sales to smaller independent retailers) rather than on individual consumers.

The formats for unorganised food retail in India include the following:

The Indian food retail market is characterized by several co-existing types and formats. These are:

  • The road side hawkers.
  • The kirana stores (the Indian equivalent of the mom-and-pop stores/unorganized convenience stores),

Hawkers –

The unorganized sector is characterized by the small vendors– these lowest cost retailers can be found wherever more than 10 Indians collect . As far as location is concerned, these retailers have succeeded beyond all doubt. They have neither village nor city-wide ambitions or plans.Hawking of food products, cooked food and FMCG products is a very interesting model of retailing.

Kirana/Grocers/ Provision Stores/Mom-and-Pop Stores

Semi-organized retailers like kirana (mom-and-pop stores), grocers and provision stores are characterized by the more systematic buying – from the mandis or the farmers and selling – from fixed structures. Economies of scale are not yet realized in this format, but the front end is already visibly changing with the times.

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