Modern retail in India is like bamboo: players need to wait five years before it starts to grow.
That was Sumit Saran, CEO of Indian retail giant Future Group’s produce division, explanation for the modern retail sector’s failure to, as yet, make any real headway in India.
“No-one has given modern retail the five-year chance yet,” he told Fresh Produce India delegates in Mumbai. “Like bamboo it needs five years before it can show any visible signs of growth. Companies keep pulling out the shoot too early.”
Future Group is currently focusing on its retail roots by establishing direct relationships with growers, as well as investing in coldstorage and cold-chain logistics, Saran said.
“I am looking at details at the moment, not retail,” he said. “If I get my details right, then the retail growth will follow because we will deliver the best possible product.”
Although shopping at modern supermarkets has been slow to gain ground in India, online shopping has become hugely popular with Indian consumers over the last three years.
Vipul Mittal of online Indian retailer Big Basket, which started in 2011, attributed this stark difference to the enabling factor of technology.
“The pace of change in ecommerce is much faster than modern retail because you can reach a much bigger catchment of consumers over a wider radius,” he said. “Plus the benefits of ecommerce to the consumer are huge – with a click they can order their shopping and have it delivered, freeing them up to do something else – so growth is very fast.”
Ecommerce will become instrumental in helping suppliers build their brands in India, Mittal added, because online retailers can talk directly to consumers about a product and how best to eat or prepare it.
“We can give advice about when best to eat mangoes on our website. Ecommerce gives you the opportunity to talk directly to the customer,” he said.
“Big Basket serves 10,000 customers on a daily basis in India,” Mittal said. “This is the power we are taling about in terms of brand building, and educating consumers about a product.”
Despite its phenomenal growth, ecommerce will never take over from modern retail, said Saran.
