Sharmila Banerjee, founder and CEO, Taaza Plaza talks about the Taaza Plaza retail model, and the future of Indian F&V retail industry
What is the business model of Taaza Plaza?
Taaza Plaza is a public-private Partnership (PPP) between Star Agri Warehousing & Collateral Management Ltd along with Fuzion Inc Pvt Ltd and the Maharashtra State Agriculture Marketing Board (MSAMB). As per our business model, we have set up collection centres in close proximity to farms where farmers and their representatives bring their fresh produce to be cleaned, sorted and graded. From collection centres, the produce is transported in air-controlled trucks to distribution centres where it is packed and loaded onto mobile vans. These mobile vans or our mobile retail stores are parked inside society premises for providing fresh fruits and vegetables to consumers at their doorsteps. The van staff is adequately trained, and to ensure honest pricing, electronic receipts are given, besides which, each van is fitted with a weighing machine. We also have provision for home delivery.
Please share the investment and current positioning of Taaza Plaza.
Since launching Taaza Plaza as a pilot project in September, 2013, an investment of a couple of crores has already been made. Currently, we have three temperature-controlled vans (mobile outlets) which are actually Eicher trucks that have been customised as per our requirement, besides feeder vans. These mobile units cater to Andheri (W) region, which is geographically a huge area to cover with hundreds of societies. In a single day, we retail around 250 to 300 kg of fresh fruits and vegetables. Customer response has been stupendous and the concept has received accolades for quality, staff service, and ease of shopping, and we are getting repeat visits.
What value proposition does the concept offer to consumers and stakeholders?
Our value proposition for consumers can be described as convenience and purity. In the wake of growing urbanisation and fast paced life, I believe convenient offerings like ours are going to impact the industry in a big way. On the supply side, as we have collection centres near the production belts, so farmers need not travel long distances to the mandi to sell their fresh produce. We also aim to cut short middlemen and maximise benefits for farmers in such a way that they get optimum price realisation for their produce. The current supply chain network between farmers and customers is largely unorganised with 6-7 intermediaries, resulting in 30 to 35 percent excess pricing due to lack of proper supply chain and logistics facilities, high wastage and leakage. As such, there are no benefits of economies of scale. Such a scenario gave us the impetus to form a retail model like Taaza Plaza.
Frequent price fluctuations are inherent to F&V business, so, how do you propose to maintain profitability?
Since we procure directly from farmers, we try to maintain our prices lower than the market rates even in times of steep price rise. F&V retail operates on thin margins. With efficient utilisation of resources and by achieving economies of scale we intend to minimise the effect of such situations and pass on the benefits to consumers through sustainable prices.
Please share your view of the organised F&V retail industry in India.
The current growth of organised fruit and vegetable retail trade in India is being driven by domestic players across formats like hypermarket, supermarket, discount stores or convenience stores. Most of the F&V retail chains are buyer-driven value chains as the buyers dictate and specify quality standards, which suppliers have to meet. Such stores are creating value on the front-end (market) by promising quality and freshness, wide product range, lower prices, and a more conducive shopping environment.
How do you see organised F&V retail changing in the coming years?
Farm to Fork is set to become a game changer in the near future. Nowadays, the shift is towards convenience and quality. With food prices soaring, more efforts will be done to eradicate supply chain inefficiencies such as elimination of the middlemen. This will create a win-win situation for farmers (through better price realisation of produce) and consumers (through quality products at better price). I feel that, like Western countries, the concept of mobile retail outlets will be increasingly replicated in India as well. Moreover, introduction of FDI in retail would facilitate more strategic partnerships and private equity participation in the F&V retail sector.
How do you envision Taaza Plaza’s future?
The PPP model like ours is the future of the retail industry. I firmly believe that the government can only play the role of a facilitator, and it is the private sector that needs to play a larger role. Through Taaza Plaza, we provide improved customer value and satisfaction, which is bound to provide the twin benefits of customer attraction and customer retention. So, the model is here to stay and will gain wider acceptance in the years to come. For now, we are looking for expansion across Maharashtra.
The pilot stage is nearing its end, are we now ready to expand to 25 vans in the coming 3 to 4 months. Once the new vans come in, we will go towards south Mumbai, Bandra and Powai while continuing to serve the Andheri (W) market.
Namita Bhagat has an academic background in management and finance. She writes on the retail and franchise business in the Indian and Middle East markets.
