The Hindu : Business : Boom in food and grocery retailing

Online edition of India's National Newspaper
Wednesday, Nov 22, 2006
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Boom in food and grocery retailing

Staff Reporter

Its growth rests squarely on assured quality and superior service

KOCHI: Food and grocery is the segment to watch for its rapid growth in organised retailing in the country that has grown into a business worth nearly Rs.90,000 crore yearly.

If food and grocery formed just 18 per cent of the organised retailing business till recently, its share in the business has doubled now. Its growth rests squarely on assured quality and superior standards of service promised by organised retailers, says Gibson G. Vedamani, Chief Executive Officer of the Retailers' Association of India (RAI).

He was speaking to The Hindu after attending the launch recently of a certificate course in Professional Retailing Skills (PRS) offered by the city-based SB Global, in collaboration with RAI.

Mr. Vedamani said that there appeared a sense of urgency among big players in the organised retailing sector to spread their wings and to leave their footprints on the market that had enough space for all the players.

The speed with which several big names were rushing to Kochi, pointed out Mr. Vedamani, was an indication of this new urgency among the retailers. He was of the opinion that the local brands of retailers would flourish too since the market was so big.

In the organised retailing market that was growing at around 40 per cent a year, there might not be a major shakeout in the next four to five years. This was just the tip of the iceberg of the retailing market potential India had, he said.

Mr. Vedamani also said that with the rapid growth in food and grocery segment, farmers stood to gain too, as there would be better integration. He predicted benefits for the consumers because of a possible drop in the prices of produces and products because of the competition among the retailers.

He suggested that a well-oiled system of replenishment or even backward integration would be crucial to reaping the benefits of the growth in the food and grocery segment. However, he felt that Indian retailers needed some more time for growing in the food and grocery segment.

On the FDI front, Mr. Vedamani said that the retail segment should take a cue from the Chinese example where foreign direct investments were gradual. It should be in phases, he said, as it was a sensitive segment.

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