A) INTRODUCTION:

By the turn of the 21st century, the face of the Indian retailing changed significantly. The
retailing industry which until the early 1990s was dominated by the unorganized sector ,
witnessed a rapid growth in the organized sector with the entry of corporate groups such as
reliance, Tata, RPG, ITC,etc into the retailing sector.. The organized retail food and grocery
sector constitutes the largest opportunity for growth and account for 2% of total sales at present.
Growing at the rate of 30%, the Indian food retail is going to be the major driving force for the
retail industry. Rated the fifth most attractive emerging retail market, India is being seen as a
potential Goldmine.

Retail is India's largest industry, accounting for over 10 per cent of the country's GDP and
around eight per cent of the employment. It has emerged as one of the most dynamic and fast
paced industries with several players entering the market. With the introduction of 100% FDI, it
would definitely give a guaranteed facelift to the industry. The future is promising, the market is
growing, government policies are becoming more favorable and emerging technologies are
facilitating operations.

B )UP-AND-COMING FOOD RETAIL FORMATS:

With the changing food consumption patterns, consumers need for
convenience, choice and value for money the set-up of retail format is changing. The Indian
consumers do visit about eight to ten outlets to purchase various food products, which make up
the daily consumption basket. These outlets include neighborhood kirana stores, bakeries, fruit
and vegetable outlets, dairy booths and chakkies (small flour mills), which is very time-
consuming and unproductive way of shopping for food. With changing lifestyle there is growing
scarcity of time, and convenience in food shopping is emerging as an important driver of growth
of one-stop retail formats that can offer consumer 'value for time' in addition to 'value for
money'. These are giving an opportunity to various other retail formats:

a) Neighborhood Stores
In India about 90% of food purchases are made within a distance of 1.5 km from the customer's
home. This means that an organized retailer would need to have a 'neighborhood store' close to
customers in order to capture the share of wallet that is spent on food. These stores would cater
to the consumer's daily and weekly needs. The outlets closest to a neighborhood store in India
are 'Safal' outlets operated by Mother Dairy in Delhi, Margin Free in Kerala and Subhiksha.

b) Supermarkets
This format caters to the consumers' need for choice and variety. These needs translate into 'more
width' and 'more depth' in each category. These stores cater to the consumers in a catchment area
with a radius of 3 to 4 km and therefore need to be destination stores. A supermarket can cater to
the consumers' weekly, monthly and occasional needs. Examples of supermarkets already in
India are Food World, Trinethra and Nilgiri's.

c) Hypermarkets
Hypermarkets are essentially destination stores catering to the consumers' bulk shopping needs in
both food and non-food categories. The key added values for the customer are 'choice' and 'value
for money' because products are sold at a discounted price. The hypermarkets model of food
retailing is new to India. Spencer’s (RPG), Big Bazaar (Pantaloons), Star India Bazaar.

d)Cash & Carry (C & C) Stores

These stores sell their products to their members only. The members are typically retailers and
institutions. The key added value is a wide range of products under one roof, available at
wholesale prices. Metro has started the first C & C store in India in Bangalore. The typical area
of a C & C store is 70,000 to 100,000 sq. ft. and both food and non-food products are stocked

C) KEY DEVELOPMENTS IN FOOD RETAIL:

The major development in food retail is consideration of Foreign Direct Investment (FDI)
with a limitation that all companies would have to meet mandated export obligations. Food
processing minister Subodh Kant Sahay told ET that “We are considering a proposal to allow
FDI in food retail. It should be in such a way that it would boost our agriculture. Our farmers
must also get benefits of economic liberalization”.

The government is also considering the opening up of the $330-billion retail market with
adequate provisions to protect neighborhood stores.

In every retail format food trade is growing. More and more corporate houses such as HLL,
ITC, Godrej and Reliance are already working into food retail. Huge increase is expected
from the corporate players, which will help grow the entire food retail sector. Dabur’s Amit
Burman has also forayed into food retailing. According to Amit "Food and beverages retailing
is a very attractive segment and with Lite Bite Concepts we are targeting Rs 1,000 crore sales in
a couple of years with around 200 outlets," Well-established players such as Subhiksha, Food
Bazaar and Spencer's Daily are also tapping into backward linkages, while trying to match their
expanding geographies with retail formats. Also, most food retail players have been region-
specific as far as geographical presence is concerned. Take the RPG Group's FoodWorld,
Nilgiris, Margin Free, Giant, Varkey's, all of which are more or less spread in the Southern
region; Sabka Bazaar, Big Apple has a presence only in and around Delhi; names such as Haiko
and Radhakrishna Foodland are Mumbai-centric; while Adani is Ahmadabad-centric.

Retailers' entrance in the unbranded food space

Modern food formats like Food Bazaar and Spencer's have their eye on the unbranded part of the
consumer's shopping basket. This constitutes as much as 60% of the total purchases and growing
sharply, says AC Nielsen estimates. Retailers are offering a package of convenience and
freshness, and have an edge over manufacturers that focus mainly on packaged conveniences.

Food retailers are offering 'live kitchen' formats, which offer on-the-spot home-style gravies, dal,
cooked rice and kneaded dough with options like grinding coffee fresh at store, idli batter,
paneer, curd and cut vegetables.

D) EMERGING TRENDS IN FOOD RETAILING:

a) Big becoming bigger

Globally, retailers have realized that size drives profitability, not just through economies of
scale in operations but also through higher bargaining power leading to better margins. While
many players are entering the retail space in India currently, the growth stage will be
Characterized by rapid expansion and consolidation among these players.

b) Rise of organic foods and health and wellness segment

organic food is increasingly becoming popular due to its perceived health benefits its biggest
advantage is that it is produced processed and packaged without use of any chemical people are
becoming more health conscious now.

C) Increasing focus on private labels

As competition in the organized retail market increases, discounts and promotions are
expected to play a critical part in generating footfalls. To counter the impact on profitability,
organized players will find it more attractive to promote private labels or store brands given
their higher margins. The consumer too would benefit from lower prices.

E) RETAILING A TECHNOLOGY INTENSIVE

INDUSTRY:

Retailing is a `technology-intensive' industry. Successful retailers today work closely

with their vendors to predict consumer demand, shorten lead times, reduce inventory holding and
thereby, save cost. Wal-Mart pioneered the concept of building a competitive advantage through
distribution and information systems in the retailing industry. They introduced two innovative
logistics techniques - cross-docking and electronic data interchange. Today, online systems link
point-of-sales terminals to the main office where detailed analyses on sales by item,
classification, stores or vendor are carried out online.
Besides vendors, the focus of the retailing sector is to develop the link with the
consumer. `Data Warehousing' is an established concept in the advanced nations. With the help
of `database retailing', information on existing and potential customers is tracked. Besides
knowing what was purchased, by whom, during which time of year, festive seasons shopping
pattern, all these information are compiled, analyzed and future shelf planning, discount offer or
season sales planning is made.

F) CONCLUSION:
The past 4-5 years have seen increasing activity in food retailing. Various business houses have
already planned for few investments in the coming 2-3 years. Though the retailers will have to face
increasingly demanding customers and intensely competitive rivals, more investments will keep
flowing in and the share of organized food sector will grow rapidly.