Food and Grocery retailing serves as the link between consumers and manufacturers. In recent years, these retailers have witnessed a clear paradigm shift (need-convenience-comfort-quality premium) in the Indian consumer’s habits. Today, the consumer is more aware and prefers a comparison based product purchase. The expectations from organised retailers in terms of product knowledge, offers and overall ambience have increased as the same cannot be expected from the unorganised shopkeeper down the lane. New categories are penetrating the sector and being accepted by the large consumer base.
Organised retail largely depends on food retailing in India, but the reverse is not true. Food retail is not dependent on the organised segment but the growth thereof is directly proportional. The expansion is mutual but food retail is also absolute within its own orbit. The mutual growth of food retail and organised segment has fomented “food-specific organised retail” formats -the previous year witnessed an appreciable growth in such formats. Outlets like Godrej’s Nature’s Basket and Le Marche, Sugar & Spice have grabbed a hold on the Delhi NCR market. Serving to a niche segment, almost ~80 percent of the space in these outlets is allocated for food and grocery Articles.
Going into the nitty-gritty of organised retail formats, food retailing has served as the backbone in the past and will continue to do so in the future. With an estimated market of USD 343 billion, the food and grocery segment is the single largest retail category and accounts for nearly 70 percent of the total retail market (2012). The organised retail segment for food and grocery is estimated at USD 10 billion and accounts for 30 percent of all organised retail. For organised formats, India serves as a land of opportunities with a population in excess of a billion, and supporting a sizeable high and middle income segment.
The opportunity may be huge, but so are the challenges. Presently, a food retailer deals with high rentals and a lack of skilled manpower. Apart from these operational challenges, the wide geographical spread and varied local preferences also play a crucial role in satisfying the consumer’s needs across the nation.
Some small-scale retailers have unlocked the local preference puzzle; however, they are unable to capitalise on the expansion opportunity. The wide demographics and democracy are key Indian assets but catering to this demography is the biggest challenge confronted by food retailers.
The huge consumer base is in actuality a challenge as the majority is in the rural sphere. Percolating traditional supply chain practices, patchy logistics and undulating support infrastructure adds to the problems in this space.
In a typical product value chain, food retail is considered as the endpoint. However, it is time to view it as an initiation point so as to enable better future interventions for food retail.
Food retailers in India deal with an array of challenges and the need of the hour is to seek “comprehensive steps” towards holistic solutions, as a “single challenge at a time” approach will not serve the purpose.