Fortune in Rural Retail Hinges on Empowering Farmers

Monday, September 10, 2007

Modern retail?s rural foray sounds more like a fairytale journey than a trip with a strict business purpose. In fact, several dangers lurk, behind the lure of the rural idyll, and one of the biggest challenges lies in ensuring a constant flow of funds to boost the buying power of people in India?s 6 lakh villages, home to 72% of the country?s population. MUMBAI: Modern retail?s rural foray sounds more like a fairytale journey than a trip with a strict business purpose. In fact, several dangers lurk, behind the lure of the rural idyll, and one of the biggest challenges lies in ensuring a constant flow of funds to boost the buying power of people in India?s 6 lakh villages, home to 72% of the country?s population.

Experts agree that the best way out is to spread awareness among villagers about the exact price of their produce so that they aren?t taken for a ride by unscrupulous elements.

This would, therefore, ensure that they get a steady and decent income whenever they sell their produce, experts add.

Says Shailendra Tyagi, head of marketing, ITC?s international business development: ?How can we create fortune at the bottom of the pyramid is the big question. We have created e-choupal, which is an all-in-one centre for the farmer. Depending on the quality his goods, the produce is evaluated and the farmer is paid in cash. There itself we have a wide range of products ? from grocery, food, apparels, stationeries, etc. It also provides services like health check-up, banking facilities, insurance, etc.?

Rajesh Gupta, president, Hariyali Kisan Bazaar of DCM Shriram Consolidated, says, ?We cannot afford to ignore the rural population. It is imperative to educate them on various products and services. I would essentially like to raise two questions: how do we create demand and service it? And how do we create viable business model??

On his part, A M K Sinha, executive director, Indian Oil, says, ?While agriculture in rural India got mechanised, the power sector couldn?t keep pace. When we looked at the fuel requirement we found that it was mainly dominated by the grey market.

According to McKinsey report 21% of HSD demand comes from rural India. This gave birth to Kisan Seva Kendra (KSK) and we made a brand out of it. KSK is a low cost retail format offering fuel and non-fuel-added services with penetration.?

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Source: DNA India (link opens in a new window)