Piramyd to focus on food business

Piramyd Retail Ltd, which is fast expanding both its retail format stores Piramyd and Tru Mart, intends to increase its focus on food business in coming years. The company plans to flood the food segment with its inhouse brand of butter and sauces, among others. “The food and grocery segment is a major revenue earner. In all other segments except personal, brand loyalty is much low. We have already launched our grocery and spices brand in select markets and later plan to introduce dairy products as well,” said Upamanyu Bhattacharya, chief executive officer of Tru Mart. “We will be coming up with 75-90 stores across the country. Each store will cater to 2,500-3,000 people,” he said. Piramyd is also fast changing the model of Tru Mart stores from neighbourhood stores to supermarkets.

Godrej’s Aadhar to have 100 more retail outlets

Godrej Agrovet, the retailing unit of Godrej Group, plans to open 100 agri retail outlets under its Aadhar brand in four states in the next one year. “We will be launching another 100 retail stores in Punjab, Gujarat, Haryana and Maharashtra,” Godrej Agrovet general manager (human resource) Videep Singh said. Godrej already has 47 stores in these states and would like to have more retail outlets there since logistically it was easier and economical, he said. Around 15,000-18,000 people would be hired in the new stores, he said. These outlets will sell seeds, pesticides, fertilisers, grocery, apparel, footwear, home appliances, furniture and kitchen appliances among others.

Big grocery retailers may come under licence raj

Mayur Shekhar Jha & Rajat Guha NEW DELHI (ET)

THE government is mulling the introduction of a licensing regime to regulate grocery, fruits and vegetable retail in the country. As per the model being considered by policy makers, any shop dealing in retail of food and grocery items such as atta, edible oil, fruits and vegetables, and spread over 10,000 sq ft will mandatorily have to seek licence from the local urban body managing that area. The objective is to check unfettered growth of grocery retail and to protect small kirana stores by restricting the mushrooming of organised retail outlets in a particular catchment area. When implemented, the licensing policy will have a direct impact on all hypermarkets where selling of food and grocery items is proposed. Both Reliance and Bharti plan to operate huge hypermarkets, ranging from 50,000 sq ft to even 1.5 lakh sq ft in certain cases.
The retailers will be allowed to operate only in a specified catchment area, thus minimising the scope of competition between them and local kirana shops. For one, in the case of Delhi, the MCD, which is the administering authority in most areas, will be empowered to give these licences. Large mega outlets and hypermarkets will be asked to operate from outside the city. The policy is being worked out by the commerce, urban development and labour ministry. According to sources, the move has come at the back of Left parties’ demand of regularisation of retail. “The Ministry of Urban Development is already finalising zonal plans. The zonal plans for Delhi will be ready by January next year. Subsequently, the same model will be followed in other states.
The move is aimed at protecting the interest of local kirana stores from unfair competition thrown up by large corporate retailers,” a senior government official said. Zonal plans divide a city or town into different zones, specifying areas for mixed land use. These plans are then incorporated in the city’s master plan. However, when implemented, the mandatory licensing will not impact the basic food and grocery format of retailers like Reliance and Future Group and the proposed Bharti Retail.

FIGURING IT OUT

Pothik Ghosh (ET)

FOR petty shopkeepers and hawkers corporate retail could well prove to be a difficult customer. A paper, based on a sample survey conducted in Mumbai and published in the Economic and Political Weekly (June 2-8, 2007), has revealed that malls, centres of organised corporate retail, threatened 50% of small shops with either a substantial decline in sales or permanent shutdown. Those are ominous portents. More so, since retail giants like Wal-Mart-Bharti, Reliance planning to expand their share of the trade from the current 3% to 15-20% over the next four years. In fact, the value of organised retail industry is projected to increase to Rs 1,000 billion (2.8 times of its current valuation) during that period.
The survey — which was based on a randomly chosen sample of 82 small retail shops and 30 hawkers within about one-kilometre radius of four malls (one in Lower Parel, another in Mumbai Central and two in the Bhandup-Mulund area) — does show that the impact of shopping malls on unorganised retail is not uniform, but varies in accordance with the type of business activity being pursued by shopkeepers and mobile vendors. And so while it did turn up the unexpected (11% of the sample reported an increase in sales with 18% remaining unaffected), that was hardly enough to mitigate the disturbing discovery that 71% of the sample reported decline in sales. The maximum number of shops/hawkers (27.5%) in the sample reported a decline in sales that was more than 10% but not more than 20%. Unorganised retailers who reported sales decline of less than 10%; more than 20% but not more than 30%; and more than 30% but not more than 40% comprised 22.5% each of the sample. Only 5% of the sample reported a fall of more than 40% in their sales.
Vegetable and fruit sellers, and electronics and electrical shops have, within the general sample of unorganised retailers, been the worst hit with all of them (100%) reporting a decrease in sales. (See Table 2.) The dip in sales was found to be in the 70-81% range for shops with inventory valued at up to Rs 25 lakh. This decline was considerably lower (67%) for shops with inventory value of more than Rs 25 lakh but less than Rs 50 lakh, and none at all for shop(s) in the more-than-Rs-50-lakh category. (See Table 1.) As for drop in business by shop size, outlets that figure in the 400-500 sq feet bracket have been the worst hit with 90% of them reporting a slowdown. This decline, however, becomes relatively less alarming as we move to the 500-600 sq feet (67%) and more than 600 sq feet (50%) brackets.
Surprisingly, while 75% of itinerant vendors and below-100-sq-feet shops taken together report reduction in commerce, the figure on the same parameter in the 100-200 sq feet and 200-300 sq feet shops are 35% and 52% respectively. But instances of loss of jobs, despite such alarmingly widespread decline in the business for unorganised retailers due to malls, have surprisingly been few and far between. In all, only nine of the 112 retailers who comprised the sample had laid off their staff since the malls had come up in their respective areas — in all, 11 hired hands (3% of the original workforce of 401 in the units that made up the sample) had been sacked. But that, more than anything else, was on account of the sample largely consisting of family-owned small shops, with 60% of them with no employees.
So, decline in sales would, in this case, be reflected not so much by retrenchment but reduction in earnings per head. Such a situation is as perilous, if not more, than rise in unemployment as it would lead to a rise in the population of the informal working class, what with operations of a large number of above-subsistence level, petty accumulatorbusinessmen being rendered unviable and redundant.