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Top Food Industry leaders All Set to Tap the Potential of Tier II and III Cities

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India will very soon see a big wave in Online Grocery Shopping

With the food and grocery industry constituting 69 percent of India’s total retail market, and the advent of the retailers penetrating and exploring new markets, the industry is sure to witness a boom. Developing the Indian food palate to international standards, the progress of multi-channel retailing and businesses tapping new mediums of trade, the industry is foreseen to expand manifolds in the years to come. At the 7th Food and Grocery Forum India (FGFI-2014) and the concurrent India Food Service Forum (IFSF-2014) leading food retailers, industry experts, specialists and industry leaders discussed the importance of winning and retaining customers, potential of the new consumption hubs and innovation in trends.

Moderator , CEO, Future Value Retail moderated the first session of the day. He posed a question to the panel on whether there a scope for an organised trade in Tier II cities. Can a Kolhapur dream to become Kolkata or can a Madurai dream to become Mumbai? Replying to the question, Aseem Soni, Director Consumer Sales, Cargill Foods said that major retailers in general underestimate the power of Tier II cities, whereas the fact is that the Tier II cities are now being exposed to brand aspirations through media and as per observations, the customer in the Tier II city prefers convenience over value, hence, both the traditional and modern trade has to co-exist to deliver to the expectation of the 80 percent of the Tier II city consumer of the packaged products. The modern retailer has to push this change and hence has to actually collaborate with the local traditional retailer rather than compete.

Engaging the customer is a very important task in hand for a retailer in Tier II cities, and to add to this, , Chief Merchandising Officer, Ltd. said that “Before we talk about consumer engagement, we need to measure consumer’s adaptability and spending power in the Tier II cities. Five to six years ago television soaps captured the lifestyle of the metros whereas today all the soaps are in fact showcasing Tier II and Tier III cities. This proves that there is a huge aspiration among the people in these cities which the retailer has to tap. We, at Ltd. meet lots of students from these cities as part of the interview process. We see lot more enthusiasm in the students from these cities as compared to the students from the metros.”

A S Chadha, Vice President Sales, Organised Trade, Nestle stated that Mass Media has played a big role in raising the exposure of the rural market which is in fact setting the actual consumer aspiration. The aspiration is becoming higher and higher day by day whether it is a dairy product or automobiles. The key element to be focused on is in fact the supply chain and infrastructure in the tier II cities. The potential of these cities can be tapped only by facilitating supply chain and logistics.

For 90 million population in India only 40 percent of modern trade, So should we wait for the modern trade to get organized – was the next key question asked by moderator, Naik, to which Manish Behl, Business Head, Foods, Sahara Q Shop said: “Developing foot prints is our strategy, we comply to private label products. Tier II cities are very important for us and they have been our target from day one. Tier II in India is middle class sect who will have aspirations to move to the higher class. But irrespective of the class, the consumer does not want an outdated product. As a retailer, providing the tier II city with a complete assortment is very important. Having said that, big format stores will be good for the metros but this may not work with the tier II cities, they would still like to go to the conventional stores looking for the right product mix.”

It is impossible to keep chefs away from food, and rightfully so in the next session, some of the leading chefs of the country expressed their views on the importance of developing the Indian food palate to international standards. When asked about the evolution on dining chains, dilemma of standalone restaurants, customer focus and philosophy, Chef Sandeep Pande, Executive Chef, Renaissance Convention mentioned “We are open to modifications and if a cuisine offers it, we will make it. We would like to be a business restaurant with a soul. The soul of the restaurant will be from the honesty of the ingredients.” , MD, Smoke House Grill and Mocha Cafe added that a restaurant has to be very clear to showcase what it is and what it stands for. Communicating clearly and highlighting the key offerings is very important, he stated.

When asked about multi- channel retailing for maximum outreach to every possible customer, , Sr VP, Marketing & Visual Merchandising, said: “At , we believe in trying out new things. Customers want convenience and shopping in hyper market is more like a community gathering. If Diwali is coming up, customers will still physically come to a mall to buy products rather than going back online as they want to get the look and feel of the product. India is not yet ready to go online; hence we are going slow in terms of the online platform.”

Sharing his thoughts, Karan Mehrotra, MD, Localbanya.com mentioned: “At Localbanya.com, there is a lot of research and development happening on timely basis. We try to understand the consumer’s perspective. Also, Indian customers are smarter and look for convenience. Once we achieve that, we have a customer for life hence making customer service the key aspect. Also, we have a low inventory cost as we work with a lot of wholesalers as we rely on backhand workers. It is a mixture of inventory base and just in time model. Our focus is mainly on last mile delivery of products. Almost 25 percent of Localbanya.com sales come from fruits and vegetables. The challenge is not about lack of touch and feel but about the trust factor and we accumulate data to understand what consumers want.”

When asked about reverse logistics, Shaurya Mehta, Co-founder and COO, Ekstop.com stated that most e-commerce companies don’t charge a delivery fee. Charging delivery fee is actually a deterrent for customers to stay longer. Reverse logistics is not a primarily concern for the company. We do entertain replacements and mostly reverse logistic is not a cost impact.”

The 7th Food and Grocery Forum India (FGFI) and the concurrent India Food Service Forum (IFSF) were organised by the Images Group on the 23rd and 24th of January, 2014 at The Bombay Exhibition Center in Mumbai. FGFI is the Food & Grocery industry’s think tank, where industry captains, experts and professionals congregated to share ideas and strategies that will shape the future of food and grocery retail in India. The mission of the Food and Grocery Forum India is to accelerate food retailing by creating ideas, knowledge, network and opportunities for Modern Trade, and the theme of FGFI’14 was accelerating the growth of Modern Food Retail by building appetite for food consumption in India. It is the only event in India which provides an opportunity for progressive grocers, food service operators and all industry stakeholders from across the country to identify new trends, share new ideas, witness the latest innovations, a wide range of new products, and together drive consumption.

The Food and Grocery Forum India (FGFI) and the concurrent India Food Service Forum (IFSF) are built around an innovative format that brings Knowledge, Ideas, Products and Recognition for performance through Conference, Exhibition and Awards. FGFI is supported by the Ministry of Food Processing Industries, and leading international and national trade bodies. The 2014 event saw participation by leading International and National Brands. Over 500 brands from 50 countries were present. Entrepreneurs explored over 100 business opportunities from participating countries such as Canada, Dubai, Ecuador, USA, Singapore, Spain, and Colombia. Some key highlights this year were the Drinks Theatre where participants learnt the art of mixology and spirits/wine tasting; a Live Kitchen arena with India’s most awarded Chefs; India’s more relevant Food Conference where leaders and decision makers deliberated to create a vision for the future of industry; and the Golden Spoon Awards that recognised and honored excellence in the food service and food & grocery retail sectors.