Food, fashion provide zing to India retail biz

THIRUVANANTHAPURAM, The Economic Times, November 30, 2010 - If you've noticed a huddle around the food and fashion counters at large-format retail stores, take that as a trend extending across the country. It is barely a decade and a half since FoodWorld brought branded and organized food retailing into the country in 1996, but two verticals - food and apparel - seem to driving the overall India retail story on a fast clip. "Over the last 14 years since organized retail came to stay in India, the market has seen a euphoria and then a year of despondence in 2008-09, and then a reinvention in 2010. The industry is still young, considering that many countries took four decades to have a mature retail industry. What is perceptible, though, is that the food vertical is showing a sharp increase, propelling the organized retail format in the country", says K Radhakrishnan, president of Future Fresh Foods, part of the Future group. "After the setback in 2008-09, retailers are careful in rebuilding business, but the demand for food is distinctly adding volumes to the overall retail business", says Radhakrishnan. Former head of Walmart's India operations, Jagannath P, who has launched the Posh fashion brand, sees a similar boom in apparel and fashion retailing, with the demand picking up across small towns in the country, from Puri to Palakkad and Meerut to Mangalore. Radhakrishnan, who shared his views at the UST Global retail week, said eight top cities in the country accounted for 35% of the total income, 2,500 rural pockets accounted for another 35%, and the remaining 30% was shared by other towns in the country, thus providing a wide geographical base for retail to tap into. Radhakrishnan said food was the vertical that showed the quickest offtake, and that the demand was so strong and genuine that the ongoing food inflation could be attributed to this phenomenon. "With bigger disposable incomes, consumers are upgrading themselves on food quality, distinguishing between Kashmir and Washington apples, and moving up from oil to ghee", says Radhakrishnan. He said this held the potential for a strong incentive for bigger production and investments in the farm sector, and a focus on mechanization and technological innovations. For food retailers, the challenges will lie in transportation logistics and wastage management. "Every state in the country has its diversity, and on the transportation front, too, there is some way to go, in terms of better roads, check post clearances, and refrigerated trucks, and innovation in areas like carton design will help enhance the margins", says Radhakrishnan.

Source: http://economictimes.indiatimes.com/news/news-by-industry/services/retailing/Food-fashion-provide-zing-to-India-retail-biz/articleshow/7015772.cms