A
sealed deal
The
food retail sector in India is booming with innovations energising the
segment. Anil Rajpal, KSA Technopak, in conversation with Latika Sakhuja,
charts the course
The
organised food retail industry in India is still at the infancy stage
with a share of less than one per cent of the total food retail market,
in spite of the fact that food is the largest category in the consumer’s
spending basket. Indian consumers are deprived of quality food products,
variety and value-added services at the retail end largely because of
the highly fragmented nature of food retailing in the country.
The world of food retailing is witnessing a paradigm shift that will
have long-term implications on the way food retailing evolves in emerging
economies like India. Retailers are trying to capture a larger share
of consumer spending by expanding their product portfolio. The share
of private labels in the basket of key food retailers is also increasing,
with in-house brands competing fiercely with well-established brands
of leading FMCG companies. Anil Rajpal, Manager Retail, KSA Technopak,
in conversation with Latika Sakhuja, provides an insight into the food
retail sector in India.
What is the share of branded food in final private
consumption in India?
The entire share of food consumption, branded and unbranded,
would be about 50 per cent of the total spending by consumers. This
would be lesser in developed countries, approximately between 10-30
per cent of the total expenditure. The share of branded food consumption
from the total food consumption market in India is far less. It would
be about 10 per cent of the amount spent on food.
What are the reasons for this low share?
One of the main causes for the low share of branded foods in
final private consumption is the lack of availability of branded foods.
Food retailing in India is at a nascent stage and as a result not many
varieties and categories of branded foods are available for consumers.
Also, in the absence of an efficient supply chain, a lot of branded
and processed foods are not available for consumers when it is required
by them.
What are the major food retail formats that exist
in India?
India is known as the ‘land of retail outlets’. In
fact, we have the largest number of retail outlets in the world, though
most of these are small outlets. The food retail sector in India is
largely unorganised, mainly because it has not been given the status
of an industry in the country. As a result, nobody perceived it to be
an industry or a sector where large industrial corporates needed to
enter or even explore. Consequently, small players, who have mushroomed
everywhere, dominate the food retail sector. Even retailers who have
shops at home are a part of it. We have 12 million retail outlets in
India, of which over 60 per cent primarily sell food items. These are
mostly neighbourhood grocery stores. This includes supermarkets, hypermarkets
and small convenience stores.
With the changing scenario, a number of corporate
houses have entered the food retail sector. Could you elaborate and
also tell us what areas are they targeting?
Recent entrants into the food retail sector are Tatas, Pantaloon
and the RPG group. The Landmark group and Raheja are also expected to
foray into this area soon. These corporate groups are targeting small
towns and big cities. The movement started in metros but is now spreading
across the country. This came with the realisation that the need for
food exists everywhere and does not have to be created. So, small villages
and towns are also potential markets that have a lot of scope and are
quite untouched. Also, with people becoming more aware due to increased
exposure to international trends, they do not have to be educated about
branded food and retail formats. In fact, in a lot of areas the need
exists but there is a scarcity of formats.
What are the advantages of supermarkets and hypermarkets
over small neighbourhood food retail stores?
Undoubtedly, neighbourhood stores are extremely convenient as
they are usually located at a distance of barely a few metres from houses.
The biggest drawback that these stores have is the lack of availability
of variety. On the other hand, supermarkets and hypermarkets offer immense
variety in all categories of food items. The consumers get exposed to
a variety of products and can then pick what appeals to them rather
than compromising with what is available. There ....
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