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January 9, 2012
Sayantani Kar, Business Standard
Mumbai,
January 09, 2012
The entry of Future Supply Chain Solutions into multi-brand retail via a subsidiary has given some regional brands the kind of exposure they could only aspire to before.
Shopping for the humble bathing soap has now become an arduous task for the tiny tot’s mother. She now has to choose not just among proven national brands like Johnson & Johnson or Himalaya, or for that matter Wipro’s Baby Soft; time permitting, she has to examine the benefits of picking a Doy Kids versus a Woodwards or a Mysore Sandal baby soap, and carefully evaluate the pros and cons of deploying shapes such as elephant, lion and bear and many others that grace the shelves of modern retail.
FMCG and food sections in such stores have seen an influx of smaller and regional brands in recent months. But the rules of distribution for modern chain-stores are very different from distribution for kirana stores. While the tussle between large brands and retailers make news headlines, smaller brands have more often grappled with margin issues, delayed payments and supply chain shortfalls. Enter FSC Brand Distribution Services (BDS), a subsidiary of Future Suppy Chain Solutions (FSCS), the logistics arm of the Future Group. A Big Bazaar or Food Bazaar may or may not stock the above brands but an outfit such as this helps brands of any size access a full-fledged modern trade servicing team, complete with logistics, store management as well as strategy.
More than the large pan-India brands, it is the regional brand which stands to gain by riding on modern trade. Devangshu Dutta, chief executive, Third Eyesight, a retail consulting firm, says, “Small or new brands offer the modern retailer more margins while the retailer, in turn, affords them consistent demand and a scale to grow. Future Group has done it more aggressively than others.”
Most of the brands that have signed up with BDS first came into modern retail, and often wide national circulation, through Big Bazaars and Food Bazaars which stock non-food FMCG products as well. Modern trade may still comprise 5-6 per cent of the overall FMCG market of Rs 130,000-Rs 140,000 crore, but in urban areas it hovers at 20 per cent. Devendra Chawla who is the president of food and FMCG at Future Group and has studied brand-play closely at its retail stores, says, “The many categories of Indian packaged food are still restricted to their original markets in their regions. Some of the regional brands are also challenger brands which lack the wherewithal of large brands in distribution. Modern retail stores can incubate these over time, building customer loyalty. For such brands they also provide the quickest route to the national market.”
As many mid-sized and small brands (below Rs 500 crore) lack the volumes to justify a separate team or investment in a supply chain to keep in stride with organised retail, they take the next best option — to enter some sort of distribution understanding with the big daddies of the game — such as the Future Group, Hypercity, Reliance and more.
At the same time, organised retailers, which are often large national players, don’t bend terms to suit such brands. Future Supply Chain CEO Anshuman Singh explains, “Organised retail chains expect brands to manage shelves, offer promotions and take replenishment orders through automated systems.” In general trade, the brands would just sell stocks to a distributor/stockist who would take care of the supply chain from there on. He would sell it to dealers and retailers who place orders ad hoc, on the phone.
The larger players in the FMCG space service organised retailers themselves while others resort to logistics companies and transporters or even general trade distributors who supply to stores on their routes. But these players are not comfortable with the different set of rules. For example, when servicing modern trade, distributors who have to buy stocks from brands and then pass it on to modern retail stores, might have to wait for payment since organised retailers have longer credit periods than the stockists in general trade. They often pay those brands first whose stocks fly off the shelves the fastest.
The task of labeling and packaging is another bone of contention as is the longer time taken for delivery. Most modern trade outlets have a designated time for deliveries leading to a narrow window and a queue unlike general grocery stores. At the end of the day, if the shelves remain empty, as they would with a brand’s average of 70 per cent fill rate in general trade, organised retailers just fill their shelves with other brands.
What brands get
Large FMCG companies by now have a modern trade cell. But for some brands, it would mean a distraction from the core business. Ajay Gupta, managing director at Capital Foods (in which Kishore Biyani has 40 per cent stake through Future Ventures), makers of Ching’s Secret and Smith & Jones, says, “In the long term, we would like to focus on building our brand and leave the modern trade distribution to a specialist for a country as vast as India. There is a huge range in food, limited shelf life, high substitution since people don’t wait over and above the issue of local taste.”
The Rs 118-crore company has handed over 30 per cent of its modern trade distribution to BDS with plans to hand over more. In Delhi, where BDS has taken over, Capital Foods has seen a jump from 44 per cent to 70 per cent in fill rates. Singh reasons, “General stores are in millions, and hence need so many distributors. But in modern trade, which has about 40 retail chains with 2,000 stores across India, a national distributor not only can service but also bring in supply chain efficiencies.”
Rajheev Agrawal, director and CEO of Nilon’s Enterprises, which is India’s largest pickle manufacturer with a turnover of Rs 240 crore, says, “We wanted to free ourselves from following up on purchase orders, payment collections and even merchandising at the large stores. Except for some areas which BDS does not service such as Guwahati, almost 80 per cent of our modern trade distribution is handled by them.” Modern retail returns about 15-16 per cent of Nilon’s revenues, with same store growth clocked at 25 per cent after signing up with BDS.
Ravi Chandra, general manager, sales and marketing at Super-Max Personal Care, says BDS helps with improved fill-rates and reaching smaller town which its own sales force didn’t reach. Gupta of Capital Foods agrees, “We can now reach tier 2 towns, thanks to their footprint.” Singh elaborates, “Distribution to smaller towns comes at a large cost. The volumes might not fill entire trucks for general distributors. But we already have our own transport business in the Future Supply Chains, which we ride easily.”
Ameve Sharma, president of Baidyanath Ayurved Bhawan, says, “In modern trade, every single outlet expects me to deliver stocks to it from my depot, manage inventory and negotiate consumer schemes. It is a full-time job.” This even though modern trade is less than one per cent for its Rs 410 crore turnover.
Some of BDS’ clients have seen huge jumps in their sales as a result, according to analyst estimates. They estimate 300 – 1,000 per cent increase in modern trade sales of for some of the brands BDS services. Singh says, “There is a thin line between national and regional brands. Some brands might be widely available in south India. But their presence in, say, Delhi, would be counted as presence in the north, even though it would be just one city.” Brands have to shell out a slightly higher percentage of margins for BDS’ services (11 per cent instead of 5-8 per cent on the product, according to some clients).
The big push
Future’s Singh says, “We entered FMCG distribution because we had access to both the back-end and the front-end of FMCG retail.” BDS will only be handling distribution of FMCG brands in modern trade. “We will stick to what we know best,” points out Singh. At work is the integration on the retail side with Future Group’s 208 Big Bazaars. For example, BDS works with the small brands on promotions at Big Bazaar well in advance. Plans for the discount days around January 26 — which is an annual feature now — are already afoot, with these brands manufacturing and storing stocks for additional demand.
Chandra of Super-Max and Gupta of Capital Foods point out the assortment of products based on store location is a lot better with the help of BDS’ insights. Singh says, “Understanding what flavours of wafers will work in which regions comes to us naturally, and are of help to brands like Dukes, for example.”
The front-end integration ensures that BDS always has a retail chain, the country’s largest, as its client. However, Singh claims that gradually other retailers too are subscribing to its services. Singh says, “About 20 per cent of the business (Rs 310 crore) now involves servicing other retailers.” BDS reaches 1,700 stores of other retailers.
Logistics heritage
While logistics companies would not have an in-house retail chain to learn from, retail distributors would not have a supply chain set-up like BDS has. Dutta of Third Eyesight reminds that other retailers such as Reliance had drawn up plans for supply chain integration but it was scuppered by the downturn. FSCS had been building up its logistics capabilities over the last four years. Singh believes the supply chain automation which FSCS has invested in will stand it in good stead when dealing with FMCG products.
The supply chain set up that BDS has access to offers more advantages than what is offered by regular distributors. Apart from the technology, it also incorporates features such as roll-cages which make the consignments from the warehouses to the stores shelf-ready. These allow store attendants to unpack right at the shelves with pre-sorted packaging and labeling, instead of unloading at a warehouse of the store and sorting. Shrinkage, which is a result of product pieces missing along the supply chain due to damage or stealing, has been reduced by almost 90 per cent as a result. Loading and unloading times have been reduced by 20 minutes, vital when the window to deliver goods at retail chains for everyone is about three hours.
Real-time tracking of vehicles of within one metre further saves on time and lets brand owners view their consignments. BDS’s six distribution centres which consolidate stocks also allow the flexibility to meet additional demand from one store, which the general distributors might not have met.
The use of technology by the BDS team is acknowledged by competitors as well — for instance, its ‘Put to light’ sorting which ensures that the BDS team can send shelf-ready product pieces to respective stores rather than cartons. Compared to supply chains which don’t have this technology, the speed of picking an order at the distribution centres of BDS has improved by 40 per cent while the order-picking for the various retail stores from the distribution centres is 100 per cent, says Singh.
Ashutosh Chakradeo, head, buying, merchandising & supply chain at Hypercity Retail, says, “BDS, given its lineage, understands our needs better as well. We needed shelf-ready packs rather than cartons for delivery which they have enabled. We can do it for larger brands but for smaller brands the volumes don’t justify investments.”
BDS plans to put its own salespeople in modern retail chains to push its bevy of products, another service that individual brands might not have been actually able to afford. Sampling, which is critical in modern trade, will get a boost without the need for additional ad spends, says Singh.
Devangshu Dutta
January 6, 2012
The transition between calendar years offers a pause. We can use it to evaluate what passed in the previous year, chalk out our journey for the next one.
The first response of most people to the question “What happened in the Indian retail sector in 2011” would be probably something like this: lots happened, and then – at the end – nothing did!
That is because one theme ran through the entire year, month after month, fuelled by tremendous interest in the mainstream media as well. This was about the change expected, hoped for, in the policy governing foreign direct investment (FDI) into the retail sector. Hearing the debate go back and forth, on one side it seemed as if FDI was going to cure every ill of the Indian economy, and on the other it seemed as if the country was being sold out to neo-colonists.
It’s worth remembering that not too long ago foreigners could invest in retail businesses in India freely. Benetton ran some of the key locations in the network through its joint-venture which subsequently became a 100 per cent owned subsidiary. Littlewoods (UK) set up a 100 per cent owned operation in India during the 1990s before its home market business collapsed, and its Indian operation was bought by the Tata Group to form Westside. And well before all these, one of the early multi-nationals, Bata, had already built a humongous network of stores across the length, breadth and depth of India.
The motivation for the decision to exclude foreigners from this sector may have been political, economic or mixed – that is not as important as the timing.
By the mid-90s India had just started to attract interest as private consumption was just about picking up steam. Several international apparel, sportswear and quick service brands entered the market during this time. Many of these brands started setting up processes and systems that changed the way the supply chain worked. They gained market share, and more importantly mindshare, with young consumers. In this process some of the domestic brands did suffer, some of them irrecoverably. However, with foreign investment suddenly blocked-off, many brands that wanted direct ownership in the business in India turned away. In their opinion the opportunity just wasn’t big enough to take on the hassle of a partner. Some did enter, but with wholesale distribution structures rather than in retail.
During this last decade, the Indian retail landscape has changed dramatically. During the 2000s the economic boom happened and India became “hot” again. So did retail and real estate, as large corporate houses pumped in significant amounts of capital into setting up modern chains to tap into the fattening consumer wallets. Clearly, FDI was going to come up on the agenda again, but not quite at once. Indian companies needed some headroom to grow; and grow they did, partly with indigenous business models and brands, and partly as partners to international brands.
By 2011, there was more of a clear consensus among the Indian businesses that retail could be opened to FDI and must be. Internationally, too, political and economic heavy-weights from the significant western economies pitched for opening up the retail sector in India to foreign investment. Here’s the small public glimpse of the hectic activity that happened internationally and domestically:
Such an anticlimax! For many, 2011 was the year that could have been a turning point. Could have been! If you had slept through the year and woken up on New Year’s Eve, would you have found nothing had really changed?
Ah, that’s the thing! I think most people observing the retail business actually slept through the year, because they were just focused on the FDI dream. Those actually engaged in the retail business know that many other things did change, some of which create the foundation for further growth.
The government did push on with the GST (goods and services tax) agenda. While stuck in politics at the moment, we look forward to incremental changes in harmonizing the taxes and tariffs regime, vital for truly unifying the country in the economic sense. On the downside, excise being levied on the retail price of clothing was a blow to retailers.
Growth continued. Indian’s retail giant, Future Group, grew to around 15 million square feet. The other giant, Reliance, announced renewed vigour and focus on the retail business with additions to the management team partnerships with international brands such as Kenneth Cole, Quiksilver and Roxy. Other new partnerships were announced, including significant American food service brands Starbucks (with the Tata Group) and Dunkin’ Donuts (with Jubilant). The British footwear brand Clark’s announced that it was aiming to make India its second-largest source country and among its top-5 markets within 5 years. Marks & Spencer pushed to expand its chain by more than 50 per cent, adding 10 stores to 19, while Walmart said its focus was on building scale rather than trying to squeeze profitability from its US$ 40 million investment so far. For fashion brands, the Rs 500 crores (US$ 100 million) sales threshold seemed more achievable as they used the accelerated pace of growth.
Many in the retail business talk about “the people problem”. Fortunately, some decided to demonstrate positive leadership, reflected in RAI’s announcement of an ambitious skill development plan for 5 million people in next 4-5 years, and industry veteran BS Nagesh announcing the launch of a non-profit venture, TRRAIN.
There was some bad news on the issue of shrinkage: a sponsored study placed India at the top of the list of countries suffering from theft. But the level was reported to be lower than the previous study, so there seemed to be hope on the horizon. The study didn’t say whether consumers and employees had become more honest, better security systems were preventing theft, or whether retailers themselves had become better at counting and managing merchandise over time.
A significant highlight was the e-commerce sector, which has found its way to grow within the existing restrictions and regulations, even as the online population is estimated to have grown to 100 million. Flipkart delighted customers with its service and racked up Rs. 50 crores (US$ 10 million) in sales. Deal sites proliferated and media channels celebrated the advertising budgets. Even offline businesses, notable among them pizza-major Domino’s, found their online mojo; Domino’s reported 10 per cent of its total revenues from online bookings within a year of launching the service.
In all of this the biggest story remains untold, which is why I call it an Invisible Revolution. This revolution is made up of the changes that are happening in the supply chain in the entire country, including investment by private companies in massive, large and small facilities to store, move and process products more efficiently. And in spite of the high costs of capital, suppliers are continuing to look at investing in upgrading their production facilities as well as their systems and processes. While the companies at the front-end will no doubt get a lot of the credit for modernizing India’s retail sector, it would be impossible without the support of the foundation that is being built by their suppliers and service providers.
2011 seems to have ended with a whimper. 2012’s beginning will be tainted by large piles of leftover inventory that needs to be cleared. Inflation seems tamer, but consumers have already tightened their belts, anticipating difficult times. The policy flip-flops and the political debates are sustaining the air of uncertainty. So what does 2012 hold?
Remember, the ancient Mayan calendar stops in December 2012, and no doubt there are many predicting doomsday! However, there are several others that see this as a possibility of rejuvenation, renewal.
Hope and fear are both fuel for taking action. Investment cycles are caused by an imbalance of one over the other.
In 2012, we’ll probably continue to see a mix of both. I recommend that we don’t take an overdose of any one of them. Even if you think 2011 was “the year that could have been”, I suggest still treating 2012 as “the year that could be”.
Here’s wishing you a successful New Year!
admin
January 4, 2012
Writankar Mukherjee & Sreeradha D Basu, The Economic Times
Kolkata,January 4, 2012
India’s
leading retail chains such as Future Group, Reliance Retail, Shoppers
Stop, Style Spa and Woodland are advancing their annual discounts
by up to three weeks facing a huge slump in sales since Diwali.
Most of the retailers have recorded up to 30% slump in sales in the November-December period, except in some geographies like the North where categories like winter wear has been a saving grace.
The categories which are hit the most are apparel where prices have gone up by 10-15% this year due to excise duty and high cotton prices, followed by furniture, consumer durables and mobile phones where prices increased by 5-15% in the last two months due to the falling rupee which increased import cost.
"The market has slowed down and the November-December months has not been as we had expected it to be. Apparel has not at all done well, home segment has performed relatively better, while electronics is another weak spot. Caution is creeping into retail," says BS Nagesh, veteran retail professional and chairman of the apex industry body, Retailers Association of India.
India’s largest retailer, Future Group started heavy discounts in apparel and electronics in stores like Big Bazaar and Ezone since the New Year weekend as compared to the usual Republic Day period. The group is also planning to prepone sales in the lifestyle format Pantaloons by a week.
"Winter sales were delayed because of the late onset of the season this year and were not as expected," says Pantaloon Retail CEO Kailash Bhatia.
Another chief executive of the Future Group, who requested anonymity, said the group is seeing a slower consumer demand across categories. "The signs are not too encouraging and is beginning to remind us of the early days of the 2008 slowdown," he said. Even Westside advanced their sales by a few days, while Lifestyle is going on sale two weeks earlier than the usual. Spencer’s Retail too has started their sales on December 31 as opposed to January 25 last year. The retailer says it has not much problem with the winter inventory, but is still clearing the last summer merchandise.
"Our
inventory situation is not bad, but we also started our sales
since the entire market is getting into discount mode. The surprise
element provided by the discount sale gave the consumers some
impetus," says Spencer’s Retail executive director (apparel)
Subrata Siddhanta. He said the discounts helped to double Spencer’s
sales during New Year’s eve over last year. Retail consultancy
Third Eyesight CEO Devangshu Dutta says almost all retailers’
growth plans have not been as per expectations and hence there
is a lot of inventory that is remaining unsold.
"As a result, there is a mad rush to clear inventory through big and early discounts. Consumers are cutting down on their discretionary spends as the fear of a fall in income has become more magnified now due to the economic volatility," says Dutta. Woodland MD Harkirat Singh said consumers are constantly looking for deals and an incentive to buy. "With the discounts, footfalls and customer billing has gone up," says Singh, which too preponed sales by few days.
Reliance Retail too is running discounts in its apparel format Reliance Trends, in electronics format Reliance Digital and its shoe format, Reliance Footprint. "Without clearing stock, it would be difficult to get fresh inventory for summer," says Reliance Trends CEO Arun Sirdeshmukh.
admin
January 4, 2012
Sharleen D’Souza & Raghavendra Kamath, Business Standard
Mumbai, January 4, 2012
Hit
by a sharp slowdown in sales, apparel brands and retailers are
either extending their end-of-the-season sales or sometimes advancing
it by weeks to clear their inventory and free up cash.
While French menswear retailer Celio, which has a joint venture
with Future group, is on a sale for almost one-and-a-half months
till February 14, UK-based brand French Connection is having its
year-end sale till March. Normally, these brands have their end-of-the-season
for a month.
If Celio and French Connection have extended their sale, German brand Esprit not only advanced its end-of-the-season sale by a over a fortnight to December 31 this year (it was January 16 last year), it is even offering a 40 per cent discount on the purchase of three items. Similarly, Italian premium brand Diesel is already on sale for the one last week. Its sale normally starts in end-January.
Central, the mall concept of Kishore Biyani’s Future group, which is to go on a year-end sale next week, did an unusual thing. It went for a three-day shopping event between December 30 and January 1, and offered 25 per cent discount on 500 brands.
“The slowdown has caused many retailers to advance their sales and extend their sales,” notes Pranab Barua, CEO, Madura Fashion and Lifestyle, which has a distribution agreement with Esprit.
Even many international brands such as Mango, Vero Moda, Forever New are doling out discounts — up to 40 per cent. “The season has been below expectations,” says Devangshu Dutta, chief executive officer of retail consultancy Third Eyesight. “There is significant amount of inventory that has to be cleared out. The retailers have to get fresh inventory by February-March; before that they need to clear old merchandise. Otherwise, cash would be stuck in that.”
According to analysts, the inventory levels of Pantaloon Retail, the country’s largest retailer by market value, have touched Rs 35-40 of sales per square feet, which is one of the highest in the last many quarters.
A recent newspaper advertisement by FBB (earlier Fashion at Big Bazaar), a fashion format run by Pantaloon, said it was offering a 40 per cent off on all items till January 15 at the standalone stores and those within Big Bazaar stores also.
“They have high inventory levels,” notes an analyst. “It is most likely that they will advance the end of the season sales for their apparel stores by a couple of weeks like most other retailers.”
Pantaloon Retail executives could not be contacted for comment. The company, though, had in a recent presentation said, “lower consumer spend due to increase in prices, especially in fashion category, also resulted in most competitors extending their end of season sales by a week or two”.
Apparel retailer Provogue, which used to buy 1,800 pieces from vendors every season, now buys only 1,500 pieces due to the current slowdown in sales. The chain is also giving a Rs 1,000 gift voucher on purchase of material worth Rs 4,000 to “motivate our customers”, according to managing director Nikhil Chaturvedi. “In a bullish market, we do not mind inventory. But in a slowdown, we do not want a pile-up on our inventory,” Chaturvedi had told this newspaper recently.
Kiran Kothekar, one of the promoters of Vector Consulting Group, says the extending or advancing sales will impact profitability of retailers, but Third Eyesight’s Dutta says taking a hit of margins is better than cash getting stuck in inventory.
Apparel sales have been hit as prices have gone up 30 to 40 per cent in 12-18 months due to rise in raw material prices, increase in excise duty on branded apparel and so on, which has discouraged buyers. A slowing economy, falling markets and rising equated monthly instalments have left lesser disposable money in the hands of people, say analysts and companies.
“There is a stagnancy in growth,” says Arvind Singhal, chairman at retail consultancy Technopak Advisors. “Retailers should offer more affordable products and cut out on the premium products.”
admin
January 2, 2012
CR Sukumar, ET Bureau, The Economic Times
Hyderabad, January 2, 2012
The Andhra Pradesh government is drawing up plans to open swanky supermarkets, venturing into the multi-brand retail territory that multinational retailers such as Walmart and Tesco are desperate to enter but forbidden from doing so.
It is also seeking partnerships with the wholesale units of Germany’s Metro AG and Walmart, a minister said, to create a hybrid retail model that combines the best attributes of the public and private sectors.
The first store will open by the end of March in an upmarket area in Andhra Pradesh’s capital Hyderabad. Eventually, the Congress government will spend some Rs 2,000 crore to set up a retail chain that covers all the main towns and cities in India’s fourth-largest state.
"Our retail stores will look like any other supermarket, with hygiene assured. We will offer quality packaged food products at reasonable rates," state Food and Consumer Affairs Minister D Sridhar Babu told ET, adding the main aim of the stores is to provide succour from inflation to the middle and lower-middle classes.
The stores will begin by stocking everyday staples such as rice, pulses and commodities before adding a broad range of consumer goods. The outlets will be operated by the government at wafer-thin profit margins so that prices are kept low.
In November, the Congress-led United Progressive Alliance government at the Centre gave permission to foreign companies to invest up to 51% in India’s $450-billion multi-brand retail sector but backtracked in the face of protests by traders and many political parties.
Other states such as Tamil Nadu, Kerala and Maharashtra have opened retail stores to sell food products, but with little expertise in the area, these businesses ran into severe losses. Maharashtra had to sell its ailing Sahakari Bhandar outlets in Mumbai to Reliance Retail.
Andhra Pradesh, the minister said, wants to learn from the mistakes of other states. That is why it wants to partner with the likes of Metro and Bharti-Walmart that have expertise the government lacks in areas such as procurement and logistics.
India allows 100% FDI in wholesale trade, where Metro and Bharti-Walmart operate. AP has started talks with the two for tie-ups, Babu said.
A ‘Revolutionary’ Idea Faces Challenges
Metro declined comment while Bharti Walmart said it is not in talks at present with the Andhra Pradesh government. "However, we will be happy to partner with the government on such an initiative, if invited," the cash and carry JV between Bharti Enterprises and Walmart said in a statement. The Andhra Pradesh government led by Kiran Kumar Reddy has been under pressure dealing with a separatist agitation in the Telangana region and a rebellion by the son of the late former chief minister YS Rajasekhara Reddy.
To win back public support the government recently said it will provide rice to the poor at Rs a kg, a populist move it said was necessary to ease the burden of rising food prices. Kumar Rajagopalan, the chief executive of the Retailers’ Association of India, described Andhra Pradesh’s supermarket store idea as ‘revolutionary’ but was sceptical about its chances of success.
While governments have expertise running the public distribution system, their abilities in areas such as procurement, logistics and retailing are limited, posing a big challenge to Andhra Pradesh’s plan, he said. But Babu was confident the hybrid model, which will also incorporate lessons from the failures of other states, would work well. The government has some inherent advantages that it can make use of to keep costs low, he said.
Among them is the ready availability of prime real estate and support from the state’s co-operative marketing federation Markfed for inputs such as fertilisers, pesticides, seeds and warehouses. Moreover, the Rythu Bazaars, vegetable markets run directly by farmers across the state, will be encouraged to sell their produce at reasonable prices at the government’s new retail stores.
Instead of hiring employees on the government’s rolls, staffing agencies will be asked to provide trained manpower for the stores. "In all, our proposed model should emerge as win-win for farmers, consumers and the educated unemployed youth," Babu said. EAS Sarma, a former economic affairs secretary, called the government’s move "a step in the right direction" that will address the concerns of both consumers and farmers.
"However, to make it a success, the government should adopt a model similar to dairy co-operatives in Gujarat and sugar co-operatives in Maharashtra which include suppliers in decision-making and profit-sharing," he added.
Devangshu Dutta, chief executive of retail and consumer goods consultancy Third Eyesight, said the model will work if the private players’ objectives are aligned with that of the government and their roles are clearly defined. "By managing the back-end of government-run stores, the private player will gain scale required for its own stores. The government in turn would have an efficiently-run business with upto-date systems and processes."
