The west will wait....

For all the hoopla around the entrance in FDI in retail and other sectors, we Indians have not fully comprehended the reasons the west is in such a hurry to set up shop in our country. Like us, the western countries are just as protective and just as concerned about their own economies. The protective nature of the west might be hidden behind their investments and technological advances but the fact is the east is no longer just important to sustain western economies and their way of life but a necessity without which they will no longer be able to sustain their rising expectations and popular demands.

The capitalistic economic model sustained for so long has been based on growth and rising demand. An expectation the slowing growth rate of the west has not been able to sustain. This model of investment by taking up huge credit in order to grow requires that companies need to keep growing at a certain rate or they will implode. Be it growth in terms of GDP, population growth or growth in consumer demand, the developed world has reached a saturation point. The economic crisis we see today are just manifestations of this saturation. Manufacturers need to produce more, retailers need to sell more, banks need to invest more. But where will the demand, the raw materials and the labor required come from? The developing world can provide all this and more. But unlike the earlier centuries the west can no longer grab what they want by sheer force, they will have to participate in the development.

To the west India and China represent opportunities to keep their domestic population satisfied by giving them opportunities to grow. The sheer numbers in terms of potential purchasing power that these two economies together have is what drags them to us. That is why even though domestic incomes are dropping and unemployment is rising, multinationals are encouraged to invest in India and invest heavily. Companies know that if they can successfully leverage their international experience while at the same time adjust to local conditions India and China can rescue them from stagnation or even decline in their home markets.

Every sector in the country is in a nascent stage with potential for new entrants and ideas. While there are latent inadequacies in Indian infrastructure and decision making processes, the gradual opening up of the economy has given foreign companies time to study the market and the Indian customer. The young, upwardly mobile population ensures a market receptive to new ideas and brands. Unlike China, India has a stable political and social structure and have democratic institutions similar to the west. Thus engaging India makes not only economic sense but also strategic sense. The Chinese economy might be attractive for its size and efficiency but come inherent with risk. The Chinese model of huge investments in infrastructure and a controlled currency is untested and is considered unsustainable by many leading economists. India meanwhile follows a tried and tested model of organic growth both in infrastructure and in supply-demand growth.

If the Indian government can ensure continuity and consistency in reforms, there will always be companies willing to invest in Indian no matter how slow or regulated the reform process is. India represents a long term strategic investment to them. Thus it remains imperative that we take a slow and steady path to opening up the economy ensuring growth without effecting local industries. The opportunities globalization and the world economic system has thrown at us need to be utilized to solve our internal deficiencies. Corruption and infrastructure bottlenecks will have to be addressed.

They need us more than we need them. Something we would do well not to forget.

BAND BAAJA BUSINESS!

When we think of big fat Indian weddings what comes to our minds is the mouth-watering food, jazzy outfits, sparkling diamonds, the pomp and show-off, the band-waalas, the beautifully decorated mandaps and the ever smiling bride! The aunties dancing away to the dhols, the uncles overstuffing themselves with food, the glitzy glamour of the kudis, the kids scurrying around plucking off flowers- it’s an extravagantly overwhelming affair! In spite of the fluctuations in the economic conditions, the increasing disposable income, the recession going on, this is one industry which remains unaffected! People are always ready to spend extravagantly on weddings- it is one time where they don’t think before spending for the best and this is what the retailers take advantage of. The wedding season which kick starts in October is one of the most colorful, expensive and buzzing with activity. Everyone from the phool-walas  to the mithai walas, the shaadi cards to the photography, the lehenga-sherwanis to the dhols, mehendi-walas to the bridal make up, the themes to the planners, the destinations to the décor- it’s all booked months in advance!

Marriages in India thrive primarily on the notion that it is the single high point in an individual’s life and they want to make it special. People are ready to spend a fortune to get married in a unique atmosphere, fulfilling their dreams through it. Every girl dreams about marriage and how they would like it to be- the wedding industry revolves around transforming those dreams to reality. Weddings are no longer a household affair where the relatives troop into the house a month in advance and plan it out in a ceremony, they are now a well planned, organized and publicized affair where everything needs to be  perfect. Wedding planning as a retail jig started off in 2002 gaining appeal and popularity at a later stage around 2006. “BAND BAAJA BARAAT” in 2010 further endorsed the concept of wedding planners planning small budget weddings to destination weddings, organizing star studded affairs to the maholle-ki shaadi, the local mithai- wala to the mehendi -walas-the lighting to the decoration; it covered all aspects with equal precision and dhamaal. E-portals like shaadi.com and jeevansaathi.com are fast developing with prospective brides and grooms registering to find their perfect match.

Today, a lot of avenues have conceptualized in this industry, making it bigger, better and easier to ride on. There are wedding malls which are destination stores for the brides and grooms with designer stores as well as the local designers making it affordable for all classes. Softwares like Shaadi-e-khaas which helps manage RSVPs, guest's travel dates, accounts, hotel reservations, providing directions to the venue, and uploading wedding pictures and videos.  They are commonly used by the wedding planners and retailers who have to manage a lot of weddings at once. Australian based Rio Tinto is eyeing the wedding gifts business in India which is another part of this booming sector. It plans to tap the wedding gifting market of INR 10,000 Crores by opening Nazrana outlets selling diamond jewellery. 

The wedding gifts business is growing from the traditional Haldiram boxes of sweets to luxury chocolates. The demand is high and people like Alka Gupta, a Delhi based confectioner, who specializes in wedding chocolates sells them at INR 900 a kilo in weddings- a fortune spent and a fortune earned! Aunties and grand-moms have this tradition that benarasi sarees, rajasthani mehendi, Mathura pedes, lucknow chikankari, Sabyasachi trousseau, Kanjeevaram sarees and Benarasi paan are a must in all weddings. All this and more is being fulfilled by the new age of wedding planners.  At one Delhi wedding the groom arrived in a top-of-the-range German sports car flown over from Europe specially for the occasion. Lavishness is infectious. High flying couples in Bangalore, India’s booming IT hub in the southern state of Karnataka are abandoning the south's spartan traditional marriages and turning instead to the theatrics of their northern cousins. A typical traditional Bangalore wedding costs around 500,000 INR. A Delhi couple could easily spend this much on flowers alone.

Today, people in lieu of making their weddings special and different from the ones in the past, are ready to spend and innovate. They have their set of fantasies to be converted to realities which range from wild beach weddings to traditional haveli weddings, from hydraulic and revolving stages to LED lighting, star studded weddings to chateau weddings English style, the desi beats to the church violins, weddings in mid air (hot air balloons) to wild forest weddings (Katie Perry married in the Ranthambore National Park.)- All are a reality! The charms of Indian weddings have caught the attention of Hollywood stars like Liz Hurley who celebrated celebrated her wedding in the royal havelis of Rajasthan amidst tradition.

Marriage retailing is fast catching up with the fantasies of young couples and taking the load off the parties who can now concentrate on pretty dresses and stilettos while the organizing is taken over by the marriage retailers striving to make the perfect moments.

BAND, BAAJA, BARAAT is a BIG BOOMING BUSINESS today. 

GADGET-ONOMICS!!

After the inauguration of the placement season and the placements getting off to a good start that too post the exams , it’s time to  take a ‘short’ break from the questions & answers, the GDs & PIs and of course the nerve wrecking moments thereafter; in short, the retail “atmospherics” !!(at least that’s what we would prefer calling it). Here comes a dose of “gadget-onomics”, a thirst quencher for all the tech savvy souls. Let us now explore the world of GADGETS by taking a closer look at some of the most wanted gadgets of the year 2012.

Apple iPhone 5 – “The Best thing to happen to iPhone after iPhone” is the latest buzz word. It is lighter & thinner with a 4-inch retina display, ultrafast wireless, A6 chip, iSight camera with panorama views and iOS 6 as operating system. Though Apple has replaced Google's map application - the mapping gold standard - with its own, vastly inferior, application, which has infuriated its customers. Also some complaints have been flowing in, but that is the part and parcel of the game or as they say “Glitches happen”. Yet, this newer and sleeker version is to die for!!

                       

Sony Play Station Vita- Making a debut in December 2011 in Japan and other parts of Asia, Play Station is the successor of the Play Station Portable hand held game console offering games like FIFA, F1, Asphalt, Wipeout and the likes. Software for the PlayStation Vita is distributed on a proprietary flash memory card called "PlayStation Vita card”. The device has two (front and rear) 0.3 megapixel cameras and is backwards-compatible with most PlayStation Portable games. So, GAME ON!!

                     

Nintendo Wii U- It is an upcoming video game console from Nintendo as the successor to the Wii. Wii U supports 1080p graphics and has 2 GB of memory. The console will be released in two versions; a basic white version with 8 GB of internal storage, and a premium black version with 32 GB of internal storage, which includes stand and docks. An HDMI cable will be included with both versions.The Wii U features a new controller, called the Wii U GamePad, with an embedded touchscreen. The controller allows a player to continue playing games by displaying the game even when the television is off. The system will be backward compatible with Wii. Wii U will debut with 23 games. Among the games that will available the day the machine arrives are Nintendo's own "Nintendo Land," and "New Super Mario Bros. U," along with games from third-party publishers such as Ubisoft's highly anticipated "ZombiU" and "Assassin's Creed 3" and Activision's "Call of Duty: Black Ops II." Other games include Wipeout 3, EA Sports FIFA Soccer 13, Batman: Arkham City Armored Edition and the likes.

                     

ASUS Transformer Pad Infinity- Just like the Transformer Prime, the Pad Infinity has a stylish spiral brushed metal style. It’s slim and light enough to hold, yet still manages to feel solid. The USP of this tablet is the dock, which provides another USB port and battery. But the Transformer Pad Infinity also has a great screen for films and games in the shape of its Full HD display, plus plenty of onboard storage – 64GB.The Pad Infinity boasts a screen with a Full HD 1920x1200 resolution, which is perfect for watching high-def films. The operating system is Android Ice Cream Sandwich.

                     

Apple iPad 3- It is a tablet with stunning retina display, 5MP iSight camera (with auto focus, geo tagging and face detection) and ultra fast wireless. It uses iOS5.1 and has got features like  :-

	- iCloud cloud service - Twitter integration - MP4/MP3/WAV/AAC player - Photo viewer/editor - Audio&video player/editor - iBooks PDF reader - Google Maps - TV-out

                     

Google Nexus 7- It is a tablet computer designed and developed by Google in conjunction with Asus. The Nexus 7 features a 7-inch (180 mm) display, a Nvidia Tegra 3 quad-core chip, 1 GB of RAM, and 8 or 16 GB of internal storage. Incorporating built-in Wi-Fi and near field communication (NFC) connectivity, it is marketed as an entertainment device with integration with Google Play, serving as a platform for multimedia consumption of e-books, television programs, films, games, and music and the operating system as Android. The Nexus 7 comes with many applications by default, including Gmail, YouTube, Google Maps, Google Calendar, Google+, Google Wallet and Google Currents.

These were some of the popular boy’s toys, many more such gadgets are vying for your attention. Let go of the stress for “some time” and enjoy the company of gadgets. Lesson learnt:- Gadgets = stress buster.

 If diamonds are a girl’s best friend then gadgets are a man’s best friend!!

The politics of retail

The Indian government is today a minority. It's one major ally short of a simple majority in parliament. Two years into it's term, it didn't take any huge scandal or crisis to make this happen,  though there were no shortage of both,  but just allowing FDI in organized retail. How the times have changed.

True,  retail is an indispensable part of civil society and accounts for 11% of our GDP but it has never been a part of any five year plan or government scheme.  With 95% in the unorganised sector,  retail has been growing happily without any government intervention.  If there is demand, whatever it might be for, there's will be someone ready to sell it for a profit. Retail as an institution is easily far older than governments themselves.

When big Indian corporations came out with organized retail chains, there were but whimpers of protests. When full FDI was allowed in the back end, it barely made the papers. Why now this hue and cry against foreign investment.

Let us consider the various stakeholders involved one by one, the farmer, the shopkeeper, the retail employee, the customer, the country and the politician. Let us try to remove the hype created by the media and other political instruments and concentrate purely on the normal man's understanding of what is going on around him.

The common small farmer lives in a very micro level society.  Tell any farmer in India about any government initiative and his initial questioning will be limited to four basic questions. Will I lose my land?  Will I get more money for my produce? Will I get loans easily? Will I be able to work less? A positive answer to these questions and the farmer and family are happy. FDI as such will not be able to bring any change that Indian retailers haven't had the opportunity to provide.  The farmer really doesn't care if it's an Indian or a foreign company. Why should he?

The shopkeepers are the ones the media portray as the biggest losers. But are they themselves so worried? A normal kirana owner has the pulse of his customers. He has with him the best of CRM techniques in person to person interaction which no large retailer can compete with.  He understands that his share of the pie is large and growing enough to sustain him.  While the big players cater to the top 20-25 percent of the income pyramid,  he is the owner of rest of it.  While his customers might grow up to visit the nearest Big Bazaar,  there are enough growing up from below to sustain his shop.  McDonalds hasn't exactly destroyed the local tikki-waala has it. Growing congestion and rising real estate prices have already taken the rich metro customers out of his reach. It's again the politician and the trade unions that are doing his worrying for him.

The employee is happy. The unemployment is growing and the job market is not keeping pace.  Any new job opportunities are welcomed with open arms. The country has too many young skilled and  semi-skilled laborers to sustain everyday.  Foreign players are looked upon as saviors providing better pay and better working conditions. But considering the track record of major retailers like WalMart, they may be in for a shock.  Under more liberal labor laws,  retailers are notorious in the west for their treatment of employees. Expecting them to do any better here would be foolish.

The customer is ecstatic.  Rising competition and rising assortments can only lead to cheaper products and more variety.  The monthly grocery purchase now entails more than one option while products all over the world are available through multiple channels. Retailers are beginning to get more customers centric and customer satisfaction and retention are the new buzzwords. Foreign retailers used to serving highly demanding customers will surely bring something new to the table. The customer will remain the king.

The country really needs the confidence of investors. Terrible fiscal management and growing infrastructure needs has left the economy in dire need of foreign capital. FDI will increase FIIs boosting up the stock market as well as bringing much needed investment in infrastructure. More competition and efficient practices might drive down inflation giving the RBI more freedom to control our growing current account deficit. As the Kelkar report has put so explicitly,  growth is no longer an achievement,  it is a necessity our country needs to not collapse on the weight of its growing population. FDI across the board in all sectors previously protected is the need of the hour. We have a huge market. Now is the time to leverage it to fulfill the potential our country holds.

Last and unfortunately not the least are our politicians,  the policy makers.  The ones supporting FDI as well as the ones opposing it seem to have similar reasons and similar arguments.  In the game of politics it is easy to take a stand or raise one's swords on issues whose gestation periods are long and the benefits or losses immeasurable. Thus corruption or price hikes get sidetracked as they might fall prey to immediate action which no politician wants. FDI will be seen as a boon or a bane depending on which side of parliament you sit while larger issues can be swept under the carpet across the board. Sufficient loopholes have been kept for manipulations and the numbers game in parliament has got a safe issue to hedge its bets on. What else do politicians want.

Thus neither is FDI in retail going to usher in any golden age in the country nor will it cause any catastrophic collapse.  But as long as it makes economic sense,  it could benefit the population.  Whatever be the end result,  the politicians rest smug in the knowledge that the Indian will move on and survive come what may. 

INNOVATION-DRIVING HUMAN RACE

“Scarcity is the father of creativity.”A very apt statement for the Indian economy which is plagued by low sales potential and widening fiscal deficit with the Reserve Bank Governor, Mr. D. Subbarao swearing never to part with the CRR. Amidst all the liquidity problems, retailers in India decided to have an extended spring –summer discount season ending only in first weekend of September. In the luxury space, a 'silent sale' has been on, with brands such as Jimmy Choo, Burberry, inviting their loyal high net worth customers to an irresistible sale, with discounts ranging from 30% to 50%. In Big Bazaar, salespersons scream the rates of various products, during the “Mahabachat sale” period, to create an ambience similar to that of a local mandi.

Innovation drives the retail industry, and is clearly the logic behind differentiated offerings. But the first mover advantage is swept away by copycat brands (Companies are like packs of sheep, if one takes the lead, others soon follow).This is the reason 3M company follows the 15%-30% rule, where each employee can utilise 15% of their paid time to harness their creative capabilities. The other policy is to ensure that 30% revenue is generated by products which came into existence in the last 5 years. Innovation is aimed at identifying the gaps between present offerings and future needs. HUL, as part of its energy sustenance, is pilot testing “Magic”, a shampoo which need not be rinsed, thus reducing usage of water. Marico Ltd. came up with Parachute Advanced Hot Oil, to cater to a women’s need to flock to salons for a steamy head massage. It changed the packaging of Parachute coconut oil from a tin to a plastic pet bottle and then to containers sustainable during all the seasons. The companies swear by the fact that needs have to be created, gaps need to be filled.

Innovation doesn’t always need huge capital investment and long gruelling hours in the R&D wing. Take Bharti Airtel, which outsources all its requirements, IT infrastructure handled by IBM and network infrastructure handled by Nokia Siemens, in turn concentrating on its core activities. Sometimes, understanding the customer’s needs or the SCARCITY, leads to innovation. Mansukhbhai Prajapati, the creator of ‘mitticool’, understood the plight of fellow Bhais and Behns who were subjected to the scorching heat without electricity. So he embarked on the journey of creating a refrigerator made of clay which runs without electricity. Same goes with the Tata Nano. Had Ratan Tata not realised the aspirations of lower middleclass Indian’s to hop from a 2-wheeler to a family size AC 4 wheeler, this concept would never have seen reality.

Consumers dream of luxury. Let’s say an Apple iphone, the sleek, stylish smart phone with an entire ecosystem of applications. But who says it will come with a hefty price. The Samsung is adorned with all tricks for disruptive innovation.

YO! India!

In India, after the monsoons, consumers are the next most unpredictable. They change their choices and preferences faster than the politicians change their statements. They love to start their mornings with stuffed paranthas coupled with a nescafe; wear  Levis jeans with Ganesha imprinted tees, travel by Piaggio autos,Tata buses,  Mitsubishi metros or  race past in Audis to their offices. Call their foreign clients, sell them old Chinese goods and abuse them in Hindi. Take girlfriends out on dates to CCDs and Baristas, but enjoy the monsoons with a sip of cutting five rupees chai from the chaaiwalaas. We go to  high end streets for styling ourselves but purchase from “Sarojni Nagar” or “Chandni Chowk” in Delhi and  “Linking Road” or “Heera Panna Road” in the case of aamchi Mumbai.

                          

In India that’s how retail has been working for so many years. We want everything but we are happy with anything. Our carefree nature makes us a country of 1.2 billion crazy citizens. One can sell anything in India, if he knows the tricks to catch the pulpy hearts of the palpating nation. Baba Ramdev started it by selling free yoga to elders on T.V at 5:00 AM in the morning and now his shop is selling everything from Ayurvedic medicine to Pehlwaan Atta in stores till midnight. He did not do anything wrong. The point is he saw the opportunity and used it well. That is what every innovator or entrepreneur should be doing. Products are the same but they are selling it with a little Indianness leveraging on the customer's emotions.

I love my India and so do I love the politicians here. They are the most innocent species whom you can see in parliamentary sessions, not for discussion on the agenda but for fighting with dandas. They went on foreign trips for months to learn their policies and developments but are not likely to implement the same in India as in the case of Retail Reforms.

Last but not the least, “Take my advice for FREE”, we Indians are too obsessed with free goodies that we are ready to buy them at any cost. Like in case of talk time, with a recharge of Rs499, calls to any number are free for a month. . It gives us EXTRA satisfaction.One can fondly remember the bubble gums,bought for the sake of free tattoos.We never really grow up. That is why marketers love us. We Indians focus only on free things.

Let me take a break to find an EXTRA PEN so I can write an EXTRA SHEET on tomorrow’s exam so I get some EXTRA MARKS. 

India needs more such milkmen.

When Dr Verghese Kurien passed away, aged 90, India lost its leading innovator and visionary. One whose vision was able to transform the entire dairy sector, rewarding millions with quality products and all encompassing growth. But the lessons to be learnt from Dr Kurien’s life include more than just the dairy sector. It is an example of how India requires processes customised to our unique demographics and social indices and not custom made solutions peddled by MNCs and unabashed globalisation lobbyists.

The Indian growth story is unique. While opening up of the economy and a young population has led to excellent economic growth, infrastructure and social development remain bottlenecked in political and bureaucratic red tape and corruption. Compared to India, in China infrastructure and social development comes first, and they become the major force driving economic growth. We wait for the demand to arise and then build the infrastructure to satisfy it while in China the infrastructure is already in place to drive the demand. While this makes our economy more stable and sustainable in the long run, it has led to an income divide proportional to income growth.  Today, strictly in numbers, India has more millionaires than most developed countries while at the same time is straddled with more poor than most under developed nations.

This glaring disparity has led to global corporations making a beeline to India to be a part of the bludgeoning upper-middle and upper class market, especially in the metros. The metros and other Tier 1 and some Tier 2 cities have the infrastructure and a growing population to leverage their global practices and brand values. This upper class market is large enough with enough growth for both Indian as well as global players to grow and prosper. Thus it is no wonder that the lower section, without access to the same infrastructure and purchasing power have been neglected. Even in a cosmopolitan city like Mumbai, census data show that more than 40 percent of the population live below an income of Rs 2 lakh per annum. A market segment that will need innovative processes and long term investments to tap into.

 All the large Indian corporations today are multinational players with access to global resources and able to compete with their western counterparts in their respective fields. They have access to funds as well as technologies available all over the world. But they lack the motivation to get their fingers dirty in the muck of the great Indian cattle class. Business considerations do not lend support to innovative ideas and vision in markets that involve huge efforts and low margins. To expect western MNC’s who built their businesses in developed markets to take this step is unrealistic to say the least. Thus we see that out of the box thinking is limited to small entrepreneurs who do not have the capital or other resources to operate on a large scale.

To ensure that advantages of globalisation reach the lower strata, it is imperative that Indian businessmen and entrepreneurs awake to the potential that these sections of society have. Fresh ideas designed and customised to the specific problem areas are required.  The government, even if they do not build the roads, should ensure they do not build the roadblocks to new ideas. Dr Kurien was able to make a success of Amul incorporating the automatic milk bulk vending system re-engineered from a similar process invented originally by Rowe International of USA. Such a synergy of global technology and local customisation is required. India does not lack to brain power or the technological competence to ensure more such success stories. All we lack is the vision and commitment of the great man.

YOU’LL DO IT MY WAY!!!

Not too long ago, to suggest that the Internet had an important role to play in the rarefied world of retail was either an act of misplaced bravery or outright heresy, depending on your point of view. Today, however, all the major players in this sector are falling over themselves in a rush to embrace the online world.

Now, after a stampede to set up transactional e-retail websites, brands, often with the self-consciousness of a child arriving at a new school halfway through the term, are looking to attach themselves to every new online phenomenon, from blogging to tweeting, via YouTube, Facebook and myriad other sites.

The not-so-internet savvy people have, by wholeheartedly embracing the power of today’s technology and combining it with traditional retailing skills, demonstrated that it is possible to provide an online experience that offers a compelling alternative to the traditional location-bound and time-restricted alternative.

Accelerated by the early twenty first- century economic crisis, changes in consumer attitudes having been identified, and how these were enhancing the appeal of the Internet as the preferred primary point of interaction between the consumer and brand or retailer has been understood, irrespective of the category and price point. Research and practitioners confirmed that these trends were even more apparent among high net-worth audiences for whom discretion and convenience were becoming increasingly important considerations.

The Electronic Retailing Market is an indispensable tool for retailers, vendors, suppliers, and providers who would like to profit from this exciting new medium. It is also a source of valuable, hard-to-find information for current and prospective producers of home shopping programming. 

E-retailing started with the advent of the WORLD WIDE WEB in 1995. Online banking and the opening of online pizza shop by Pizza Hut were the first few ventures. Post 1995, the two e-tailing giants, Amazon.com and e-bay.com, took the industry by storm by bringing a paradigm shift in the US. This became the bread and butter of the “tech savvy” souls. This is when the concept of online shopping kicked off. The novelty of the phenomena provided shopping convenience to the customers by providing an option to shop at home. The attractiveness of this venture has provoked others to jump into the bandwagon. With a lot of other players joining the fray, the customers can now find a good assortment of products at competitive prices. Starting from clothes, groceries, gadgets to movie tickets, gifts, and travel - Anything and everything is just a click away! The lucrative layout of the websites and the offers entice the customers. Retail spending over the internet had already reached 20 billion dollars in 1999 according to business.com.

Sitting at home with nothing to do?? BORING! Feel like shopping without going out? Now shop right from your doorstep! From Amazon to e-bay, makemytrip to irctc, bookmyshow to grooveshark, snapdeal to naaptol, Myntra to Zovi and flipkart to pizzaonline, dominos! This seems to be the latest fad of the couch potatoes!

So what are you waiting for? 

Just flipkart it!

The farmer meets the corporation

The Sunhara Wal-Mart project at Hapur, Uttar Pradesh is a joint collaboration between the Sunhara India project, a non-profit initiative for women empowerment in agriculture and handicrafts, and Wal-Mart, the world’s biggest retailer as part of its CSR activities. Started in August 2011, the two year venture entails training of farmers and direct sourcing of their produce to Wal-Mart stores across northern India. Such projects, a direct concurrence of the Indian common man and an international corporation should be able to give crucial pointers of the impact of foreign players on the Indian grassroots. Now, more than ever, as the issue of FDI in multi-brand retail is at the forefront of political and economic debate.

The town of Hapur and the adjoining farmlands are a major supplier of staple vegetables all over north India. Consisting mainly of small farmers with small to medium landholdings, Hapur has a large population existing solely on agriculture. Sunhara, funded and supplied by Wal-Mart both with technology and manpower, identified small farmers, with landholdings less than one acre and gave them training and instructions on cultivation. In return, the farmers could sell their produce to them at collection centres at rates equal or more than the local markets called mandis. This made it convenient to the farmers as they no longer had to go to the mandi and empowered the women to also take part in selling the produce.

This initiative was not new to the farmers. Indian retailers and food processing companies have been using the same process for decades now. At Hapur itself, the villagers joining the Wal-Mart initiative are familiar with brands like Big Bazaar, Easy Day and Mother Dairy who also have such collection centres. Mother Dairy in fact, has had a presence in Hapur for around twenty years. It is not uncommon for farmers to have undergone training by three or four different companies. Although these initiatives have brought about new techniques and innovations to farming, the farmers are still vary of committing themselves completely to the organised sector for a variety of reasons. 

While local mandis will accept all the produce from the farmer and provide him instant remuneration, the Sunhara initiative will only accept a small amount of his produce. Wal-Mart sources only around one ton of produce a day from all the farmers combined making it difficult for farmers to harvest and transport in such small quantities.  Also remuneration for the sale is delayed by a month or more which can cause a lot of inconvenience to the marginal farmers. The organised players have very strict quality standards resulting in more than half the produce being rejected. To meet these standards, the farmers are forced to harvest before they normally do to cater to their demands. Even then, a farmer still has to go to the mandi to sell a good proportion of his harvest, most of it of the lower grade. A farmer’s wisdom understands that transporting higher quantities of various grades together will result in much less wastage than transporting small quantities of a single grade.

From the perspective of the company, only a minuscule percentage of its sourcing is done at these collection centres. The bulk is still sourced from the mandis where there is more flexibility and variety. The vegetables have a 2-3 day lead time to reach the retail outlets thus necessitating the purchase of not yet ripened produce. This initiative has not introduced any improvement in transportation and storage facilities.

Other than improvement in techniques and empowerment of women due to the convenience involved, this initiative has done nothing to improve some of the inherent problems of agriculture in India such as huge wastages, fluctuating prices and the financial insecurity of farmers. As a part of a social service initiative, no company, neither an MNC, nor Indian retailers seem to be ready to commit the investment required to bring about any long term change in the distribution system. Only when the scale of such operations are sufficiently high to justify investments in logistics and storage will there be sufficient economies of scale to make it attractive to the common farmer. Until then, factors the inability of even the large companies to ensure timely payment raises questions on the commitment they are willing to show.

Unless there is long term strategy and vision, such initiatives will only become another attempt that gets caught up in the malaises that affect our society today like inefficiency and corruption. This would be unfortunate for all involved, as there is a lot even an MNC can learn from the wisdom of the common man that would be lost.