Month: August 2013

Sinking Feeling

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August 26, 2013

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Malls: That sinking feeling

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August 26, 2013

Abhilasha Ojha, Business Standard

New Delhi, August 26, 2013

It was supposed to be a fancy sea-facing mall boasting high-end brands and an unmatched shopping experience. It turned into a nightmare for the owner, Bhumiraj Group, when brands started pulling out of Full Stop Mall on Palm Beach Road, the Marine Drive of Navi Mumbai

A similar fate awaited Gold City Mall in Navi Mumbai’s premier Vashi area; it is now an office complex teeming with people who bear no resemblance to the inveterate mall hopper

In Delhi, Star City Mall in Mayur Vihar had hoped to capitalise on the rush of people who would walk in and out of the bustling metro station nearby. That was not to be and the management decided to lease the place out to corporates to set up their offices and to some banquet hall owners to rent it out for weddings and other functions

These are just a few examples of malls that have either shut shop or tweaked their original glitzy plans faced with poor footfalls, low brand pull and sheer mismanagement. Numbers tell the extent of trouble. Roughly 250-300 malls came up in the country over the last two years but 70-80 per cent of the spaces in these malls lie vacant. Around the same time, as many as 40 malls have shut shop, according to Squarefeet Advisory, a mall management company.

The economic slowdown has landed especially heavily on the old-line department stores that anchor many malls. As their sales and profits have tanked, they’ve been pulling out of malls, much to the distress of the smaller merchants who depend on the larger stores to feed them traffic. These trends are hitting the market capitalisations of most of the largest owners of retail real estate. Of course, the slowdown was the catalyst, but competition from online retailers has been the continued driver.

Cushman and Wakefield estimates only 50 per cent of the scheduled malls came up in the top eight cities of India in 2012. And only 250 new ones are being planned in the next two years, while there is space for at least 2,000 malls. A clear marker for shopping centre distress.

To start on the right foot:

Fail-proof the business plan: Focus on the development of retail brands and not solely on quick returns on investment; The primary responsibility should be that of catering to the consumer catchment and driving footfalls for the retail occupants. The other requirements follow from this simple premise Do a thorough recce of the catchment: Ask questions like can the catchment support the development in terms of consumer footfall and spending? Is there a connect between the needs of the immediate catchment and the occupants of the mall? Are there too many malls in the catchment area? Offer good occupant mix: You cannot have mall occupants who have little relevance for the target consumer. You cannot have the same type of retailer; this would cannibalise rather than provide a healthy mix Ensure good access: Accessibility and connectivity to get the traffic smoothly in and out of the mall is a must; ensure there is adequate parking space Avoid under sizing: A small-sized is a straight handicap because it will lack variety, which is de rigueur in the business, and you run the risk of getting dwarfed by the next big mall that throws its hat into the ring Focus on design: This involves making the mall brands ‘visible’, ensuring appropriate ‘zoning’ in terms of entertainment, multiplexes, kids’ areas, food courts etc. This will result in better customer flow management DEVANGSHU DUTTA, Chief Executive, Third Eyesight

Is India’s love affair with the mall over? Experts say this is not the end of the road but a time for introspection. Most malls go through cycles just like the economy: New malls get popular, then traffic begins to die down, then the mall enters a lull phase where anchor stores are leaving/being replaced or the mall simply closes altogether. Also, for many Indians, especially people under 20, the mall is their first experience with organised commercial activity, their first brush with fashion and entertainment, the first place they get their concept of style.

In short, this would be the time to draw lessons from the experiences of mall owners who have been forced to change the script.

Study the catchment area

The first generation malls in India were flagged off in the mid-nineties without much research or understanding of the market, say analysts. As crowds began to throng to these places, many others simply replicated the idea without a clear view of what works in the business and what doesn’t. The slice-and-sell-AC-shops-within-a-big-box approach didn’t work simply because it lacked planning and management and made no provision for demands emerging in the future.

It may come as a surprise but "this is an industry driven by real estate, not retailing", says a consultant. The experience in India, in fact, has been similar to the US market in the early years of mall development as documented by Paco Underhill in his 2004 book The Call of the Mall: A Walking Tour Through the Crossroads of Our Shopping Culture. As he points out, the industrial appearance of the mall and its box-like stores do not express the attempts of retailers to attract customers, but the efforts of developers to squeeze the maximum profit from a construction project. While some of the smarter developers quickly altered the recipe and came back from the brink of disaster, there were others that became a case study of sorts on how not to run the business.

Against this background, the biggest lesson, so to speak, has been that the mall business is like any other business. And like any other business, a thorough understanding of the consumer is the first and the most basic requirement for the business. Says Rajat Wahi, partner, KPMG India, "It is very important to look at the consumer and shopper profiles of the catchment areas before renting space to brands."

This was a lesson that Delhi’s Select City Walk, one of the most successful malls in the country, kept in mind while starting out. Spread over 1.3 million sq ft, which also include landscaped open spaces, the mall was designed keeping in mind the affluent female consumer used to shopping in premier South Delhi markets. The product mix was designed to offer quintessential Indian boutique brands such as Good Earth, Fab India etc alongside international labels such as Zara, Mango, Tommy hilfiger.

Mind you, it is as much about the brands as it is about the ambience in the mall. "You want to have a mall where the shopping experience is enhanced and people want to keep coming back," says Wahi. Some new mall owners are creating "zones" (read, multiplexes, food courts, kids’ play area) to meet the changing needs of the shoppers and upgrading services like access, parking (in terms of even lanes leading up to the malls), security, providing prams for children etc, going as far as to organise regular events around celebrity visits, shopping festivals, flea market fiestas etc to ensure footfalls and consumer involvement. The amenities draw the consumer in for reasons other than to just purchase items.

Here’s how Crossroads, which was acquired by retail czar Kishore Biyani from the Piramal Group of Industries for a staggering $66 million, made the transition. The Mumbai-based mall started floundering when the building’s poor design – which allowed consumers to have a dekko at the mall’s signature brand Pyramid but didn’t allow them to notice other brands that were housed there too – made things difficult for a majority of the brands housed therein.

Given the high tenant turnover, customer loyalty began dwindling.

Rechristened Sobo Central, not only was the mall’s floor layout changed to offer all brands better visibility, there was also been more emphasis on putting together the right mix of food, fun and shopping experience.

Speaking of design, at Delhi’s Select City Walk, the layout is such that at a quick glance, the consumer can easily read the labels/logos of 12-15 brands.

Be open to change

The shift to a revenue share model has also proved to be a win-win for brands and mall owners. Take DLF, which moved to a revenue sharing model when many of its branded malls started faltering. The group initially gave out space on a first-come-first-serve basis besides offering shops to those who promised higher rentals.

This essentially meant there was no thought given to the brand mix. What made it worse was that DLF allowed many investors to buy the shops and rent them out later. The result: no sense of ownership and low overall accountability from brands. This proved a thorny issue at the time of discussions regarding renovation or even during promotional activities.

What went wrong:

The initial euphoria of developing shopping centres has faded from the time retailers started insisting on revenue share and minimum guarantee rather than the pure rent model. With the new scenario, retailers’ ability to pay is limited by their sales. As a result, they offer rentals that they can afford, and mall developer often begin to evaluate other asset categories like offices and residential, since offices provide fixed rentals and residential comes with the inbuilt advantage of up-front cash — neither of which are available in the mall format. Such a scenario can lead to a mall closing down as a retail establishment and reinventing itself into another format. In the case of older centres — many of them were created without adequate planning or preparation, were not in the right location, or did not have the right size or tenant mix. Following are the lessons worth learning: Ensure that you have the right size, format and tenant mix for a particular catchment Provide adequate parking Do not strata sell spaces Provide professional mall management Malls must, over a period of time, evolve their tenant mix and offerings so that sales — and therefore rentals — continue to grow. In the event that a catchment does not sustain the development or there is too much completion, retailers will choose the dominant mall. When a shopping centre is not the preferred one for retailers, value retailers come in – when even value retailers cannot sustain, it is usually because of a combination of reasons. These could be: bad location, bad design, lack of adequate parking, lack of professional mall management (often the result of strata selling spaces) and a mall’s inability to find alternate usages of space. Anuj Puri, Chairman & country head, Jones Lang LaSalle India

An altered revenue share approach, says Pushpa Bector, vice-president, mall head and senior vice-president, leasing, DLF’s Mall of India, has allowed DLF to take a long-term view into mall management (that includes positioning, zoning, tenant mix, facility and finance management, promotions and marketing) and genuinely look into – and support – all the brands present in the malls with interesting promotions that can drive footfalls. The effort has helped: DLF Promenade has a footfall of 1 million customers per month and round-the-clock operations and better management have ensured higher loyalty among consumers.

Some malls have taken the scope of mall management one step ahead – they track performance of brands, collecting data on per sq ft sales, the sales of a brand and other parameters. This helps them run a diagnostics check on the brands under the roof and figure out whether the brand is using space optimally or there is need for rationalisation. In the bargain, malls have improved yields as new brands have come in at higher revenue share deals and existing ones have delivered better performance within smaller spaces.

Looking at the kind of damage poor planning brings in its wake, other malls are making sure the customer has the right brands and packaging. Inorbit Mall, which began its innings in Mumbai’s Malad area in 2004, carefully took into account the catchment and decided to focus on five anchor tenants (Shoppers Stop, Lifestyle, Spencers, Fame, and Time Zone). The management routinely studies the performance of retail brands, engages with customers to gather feedback and proactively looks out for promising brands that can be a part of the property.

The demand for space in malls like Select City Walk in Delhi or Inorbit Mall or High Street Phoenix in Mumbai is so high now that it has had to right size the stores of existing brands or relocate some within the premises to accommodate new ones. Select City Walk, for instance, has cut down the Levi’s store from 2,700 sq ft to 800 sq ft to accommodate Superdry and Dune Shoes. Next London has shed about 1,000 sq ft of flab, helping the mall welcome Apple.

Will all this be enough to bring the shoppers back to the deserted malls? Mall managers do have a lot on their plates already. Few new malls are being built, and just too many are being ‘repurposed’. Because of their location, keeping in mind the spiralling real estate costs, malls are not accessible to an increasingly elderly population; technology products are taking larger bites out of customers’ wallets as opposed to the traditional fare malls have to offer; online shopping has grown by leaps and bounds; and more and more women have less and less time to shop.

While teenagers and young adults will continue to patronise the mall as an ‘affinity centres,’ to borrow a phrase from Underhill, most real estate professionals understand more profound changes are afoot.

(This article appeared in Business Standard on August 26, 2013.)

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Demand for trendy clothes rises as premium brands see spurt in sales

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August 20, 2013

Sapna Agarwal, Mint (A Wall Street Journal Partner)

Mumbai, August 20, 2013

Indian men and women are becoming more picky when it comes to dressing. Formal wear is increasingly giving way to a trendier line of clothes that includes casual sports and lifestyle apparel, according to stylists, analysts and retailers.

Consider the case of Shilpa Kapoor, 26, a marketing professional with a multinational company whose shopping list includes “fitted dresses, racerback tops in funky prints, Aztec print skirts, sequin shorts, one of those awesome colourful bubble necklaces, and one of the funky rings maybe in a serpent form or any other designs”.

Consumers such as Kapoor, who are tuned-in to the latest global fashion trends and the increasing availability of international fashion at affordable rates, are causing non-food retail sales in India to surge even as the economy recorded its lowest growth in a decade in fiscal 2013.

“Gone are the days when you wore just anything and spending on clothes was considered trivial. Dressing well is an important part of the personality and about how you want to present yourself,” said Pampa Biswas, a stylist who works with an advertising agency.

The fashion space, say experts, comprises four consumer segments: Image Seekers, for instance, are driven by the need to be fashionable. Conformists prefer branded apparel to blend with their peer group. Perfection Seekers wear branded apparel for quality assurance, good fit and internal satisfaction, while Variety Seekers seek a range of clothes, but are mainly driven by prices and discounts.

“Image Seekers are the most fashion conscious consumers and our research shows that this group has increased in India by about 25% in the last 4-5 years in the metro cities,” said Raghav Gupta, principal, Booz and Co., a consulting firm.

In 2011, the Indian apparel market was estimated to be Rs.190 crore, growing at an annual average growth rate of more than 9% and is likely to be at Rs.295 crore by 2016, according to a report by Booz and Co. Close to 20% of this market is organized and growing at a higher rate of 18%.

Retailers agree with the trend. At department retail chain Shoppers Stop, the sales of formal wear have been decreasing and that of the trendier lines like casual sports and lifestyle apparel increasing. In the last two years, the contribution of formal brands to the category has come down from 44% to 38% while trendier casual sports, lifestyle and bridge to luxury brands contribution to the category has increased from 56% to 64%, said Govind Shrikhande, managing director, Shoppers Stop Ltd.

The availability and accessibility of international brands has contributed largely to the trend.

“There is a dramatic shift in the way consumers are shopping. They are taking fashion risks,” said Sanjeev Mohanty, managing director of Benetton India. Over the past year, Mohanty has changed his views from needing an India-specific collection at his stores to now rolling out global collections as soon as they are launched because of “globalization of fashion”.

Similarly, home-grown brand Zodiac launched a trendy casual wear brand Z3 in 2008 and repositioned the brand in 2010 to mirror global fashion trends. “It’s our ability to predict international menswear trend for spring-summer 2013 and bring it alive,” explains Salman Noorani, president and managing director, Zodiac Clothing Co. Ltd.

Moreover, big fashion brands, including Zara, Vero Moda and Tommy Hilfiger, have entered the country in the last seven-eight years.

“Of the total 200 odd brands present in India across apparel, footwear and jewellery, 150 were launched between 2005 and 2012,” said Devangshu Dutta, chief executive at Third Eyesight, a retail consulting firm.

And over the years the brands have gained scale and are making their presence felt. For instance, CK entered India in 2007 and now has 27 stores. Zara entered in 2010 and has nine stores. Steve Madden entered in 2011 and has seven stores. Diesel entered in 2010 and has 11 stores.

Moreover, the success of brands such as Zara is seeing incumbent retailers sharpen their offerings as they compete for the customers’ wallet. Zara, the joint venture with Inditex Trent Retail India Pvt. Ltd, posted a revenue of Rs.404.80 crore in fiscal 2013, according to Trent Ltd’s annual report for fiscal 2013.

“There have been nine new launches in the sports and lifestyle segment in the last three years,” said Vinay Bhatia, senior vice-president, marketing and loyalty at Shoppers Stop, citing examples of incumbents such as Louis Philippe (LP), premium menswear brand launching LP, Arrow launching Arrow Sport and Van Heusen launching Van Heusen Sport besides brands such as Celio, Gas, US Polo entering into the market.

What also is helping drive the sale of fashion wear is the large young population. The 21-30 year-old consumer is very conscious of looks and image and is willing to spend, said Mohanty of Benetton, adding that this profile contributes to 70% of the retailers overall revenues as compared to 50% two years ago.

Not that older consumers are not experimenting with fashion. “The 30 to 50 year-old segment is more interesting. They have a bigger wallet and less pressure on the wallet,” said Darshan Mehta, chief executive officer, Reliance Brands Ltd which retails brands like Steve Madden and Diesel.

To be sure, India remains one of the toughest retail markets to crack. In the last two years, nine brands have had to shut shop driven by poor foot falls, high rentals and limited shopper value in terms of brand options available, according to a Reliance Brands Ltd January 2013 report.

Additionally, as the economic growth slows and inflation persists, consumers are tightening their belts.

An India Ratings, a Fitch Ratings Ltd July report estimates that a wage rate increase at 9.4% for fiscal 2013 as compared with 10.4% consumer-price inflation “will affect household savings rate and discretionary spending”.

“Poor consumer sentiment is manifested in the low quarterly same-store-sales growth trend since fiscal 2012, driven by higher pricing with no significant improvement in volumes. Also, discounting may further dampen margins,” said the India Ratings report. Same-store-sales growth measures compares sales of retail stores that have been open for a year or more.

There is growth, though, at a slower rate. “Last year, we grew like-to-like sales at 30% and now we are growing at 18-20%,” said Dipak Agarwal, chief executive officer of DLF Brands Ltd, which retails brands like Mango and Boggi.

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Shopping Malls – Start-Off on the Right Foot

Devangshu Dutta

August 19, 2013

Do a thorough recce of the catchment: Ask questions like “can the catchment support the development in terms of consumer footfall and spending?”, “Is there a connect between the needs of the immediate catchment and the occupants of the mall?”, “Are there too many malls in the catchment area?”

Offer a good occupant mix: You cannot have mall occupants who have little relevance for the target consumer. Also, the retailers must complement each other in a healthy way rather than cannibalise customers and sales from each other.

Ensure good access: Accessibility and connectivity to get the traffic smoothly in and out of the mall is a must; ensure there is adequate parking space.

Avoid undersizing: A small-sized is a straight handicap because it will lack variety, and you run the risk of getting dwarfed by the next big mall that throws its hat into the ring. [However, the specific size can vary depending on the state of development of your own catchment.]

Focus on design: This involves making the mall brands ‘visible’, ensuring appropriate ‘zoning’ in terms of entertainment, multiplexes, kids’ areas, food courts etc. This will result in better customer flow management. Bad design and poor customer flow management within the mall leaves large parts of mall “invisible” to visiting consumers, or improper zoning that confuses customers and breaks up the traffic.

Finally, remember, it’s not so much about the “square feet”, as about the feet that will occupy it! Focus on the consumers that you want visiting the mall and why they should return again and again.

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Spilling the beans

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August 16, 2013

Meghna Maiti, Financial Chronicle

Mumbai, August 16, 2013

On the evening of July 13, an Apna Bazaar store, opened by the Maharashtra government in the Mumbai suburb of Andheri, ran out of vegetables in two hours flat. Ditto was the case with 100 similar outlets set up by the state government to sell vegetables at prices a third lower than the market.

Around the same time, in the Inorbit mall in nearby Malad, a supermarket was buzzing with shoppers. The aisles selling fancy imported foodstuff were busy but those selling fresh produce were nearly empty.

The contrasting scenes succinctly capture how futile organised retail’s attempts to sell daily needs like fruit and vegetables has been. Most organised retail ventures have none of the three pillars of the fresh produce business: direct procurement from farms, transport to outlets and cheap prices (at least cheap enough to draw in volumes).

For most, the back-end of the supply chain go no farther than local mandi or wholesale market. That’s why government-run outlets set up across Maharashtra, Kerala and Tamil Nadu to sell fresh produce at cheap rates are doing roaring business where organised retailers have failed — though both source produce from wholesalers such as the state-run agricultural produce market committees (APMCs).

Farm-to-fork is a strategy much vaunted but not practiced. Even farmers prefer to sell to wholesalers and in mandis where they get better prices. Mandis get business from organised retailers by offering them discounts.

Sanjay Pansare, director of Maharashtra APMC, says wholesalers offer organised retailers reasonable credit terms.

In states where the APMC Act is not in force, organised retailers are free to buy from farmers. But as Devangshu Dutta, CEO of Third Eyesight, another Delhi-based consultancy, says, the organised retailers buy from the mandis.

In western markets, produce is engineered for a long shelf life and transported in controlled temperature. Indian retail chains have yet to scale up so as to do this. “Modern Indian retailers sell highly perishable vegetables and fruits that may have been badly handled in the farm-to-store chain,” he adds.

Very few Indian retailers have successfully managed the farm-to-fork chain, according to Thomas Varghese, former CEO and MD of Aditya Birla Retail, and now head of the group’s textile business. Mother Dairy’s Safal is one of them. Organised retailers find it difficult to match the streetside vendor’s flexibility in terms of pricing, credit, he says.

The traditional farm-to-fork model is fraught with redundancies and inefficiencies. The market environment is hyper- competitive.

The local small retailer is no pushover, says Amitabh Mall, partner and director in Boston Consulting Group. This results in losses for the retailer, low price realisation for the producer and fluctuating prices for the consumer. “For the small farmer, the problems get compounded in absence of finance and technical knowhow, which limit him from growing his business,” argues Mall.

Experts say big retailers like Reliance Retail, HyperCity and Aditya Birla rely on middlemen after having failed to establish direct links with farmers. This despite the fact that Reliance Retail has set up three process centres in Hyderabad, Ahmedabad and Pataudi which cater to markets in the north, west and the east.

A Reliance Retail official, however, claimed that where the APMC Act is in force the company buys directly from farmers. Elsewhere, it is problematic. So is the farmer’s commitment. When market prices are low, they want to sell to the company but when prices are high, they sell in the mandis.

Plus, setting up collection centres close to the farms is not easy for lack of electricity and IT connectivity. “Then there is political pressure, vested interests, villagers campaigning against us and spreading rumours,” said the official who chose to remain anonymous.

Even with all this hassles, Reliance Retail, if this anonymous official is to be believed, has a fresh produce business contributing 20 per cent of its total revenue. In absence of official comment from the company, how truly the anonymous official’s claims reflect the reality is anybody’s guess.

Clearly, the grand hope expressed in the economic survey for logistics with forward and backward linkages to develop modern retail, agro-processing and cold chains has not materialized.

In Aditya Birla Retail too the farm-to-fork strategy has hit a roadblock. The company had decided to use the network of the Birla Shaktiman Krishi Seva Kendras and network of fertiliser outlets to source produce.

Part of the plan was to supply seeds and nutrients to farmers so that they could get better prices by selling produce in the company’s retail outlets or directly to their supermarket chain More. Well, things are not going the expected way.

“Back-end, logistics need huge investments. It takes time to make money (in this business),” rues Pranab Barua, business director for apparel and retail of the goup.

Back-end is where success lies. Walmart, the immensely successful American chain, is still in the process of investing in the back-end in India. To begin with, it is trying to make back-end supply chain management efficient so as to, in companyspeak, ‘maximise value for farmers, retailers, and consumers.’

The accent is on reducing waste in the supply chain, so that the benefit of lower prices can benefit our customers, says Arti Singh, Walmart India’s senior vice president for corporate affairs. The idea of what the company calls ‘direct farm programme’ is similar to what the Aditya Birla company intends to do, i.e, develop a supply chain, link farmers directly to consumers and introduce best farming practices.

The programme now includes over 12,500 farmers in Punjab, Uttar Pradedh, Delhi NCR, Haryana, Karnataka, Maharashtra, Himachal Pradesh, Andhra Pradesh and Rajasthan. They are all small or marginal farmers and supply up to 20variteies of fruit and vegetables. By 2015, the number of participants will go up to 35,000, says Singh.

Walmart has tied up with a logistics company in north India to transport fresh produce to its stores by refrigerated trucks. Fresh produce accounts for nearly 30 per cent of Walmart’s sales in India.

But a consumer consultant based in Delhi thinks Walmart’s farm- to- fork strategy has failed because it has been spreading out to too many random locations too fast.

Bharti Walmart, the Indian joint venture with the Bharti Group, is into wholesale cash- and- carry business, not a front-end retail operation. It has 20 stores in eight Indian states. Fresh fruit and vegetables is critical to its business, claims Singh.

Pradipta Kumar Sahoo, horticulture business head of Mother Dairy, agrees that most retailers buy from wholesalers. Mother Dairy has been in the business of selling fruit and vegetables and partnering with farmers for long a time. It has sired 110 farmers associations in 15 cities and a huge distribution centre around Delhi.

Metro cash & carry has local fruit and vegetable collection centres in Malur in Karnataka, Vontimamidi in Andhra Pradesh, Malerkotla in Punjab, Manchar in Maharashtra and Barasat in West Bengal (Barasat). But, according to a company spokesperson, imparting collection and waste education to farmers is still a challenge.

The Future Group and Spencers of the RPG group declined comment.

Logistics is a big headache for organised retail. Both warehousing and cold chains, where they exist do so not in a chain but spurts, bedevil the supply chains of all retailers. The quality of warehouses is poor. So wastage is inevitable,” says Arvind Singhal, CEO of Technopak Advisors. Big food retailers must investment more in cold chains. Also needed are specialised third- party agencies which could also invest in the back end, he suggests.

Back-end infrastructure typically includes warehouses, processing plants, cold chains and logistical support.

The government allows organized retail to buy directly from farmers to remove the middleman and to create infrastructure. A study of the Indian Council for Research on International Economic Relations in 2008 said farmers get 25 per cent higher prices for their produce when sold to organised retail. The thrust of the five- year plans has been on creating regulated markets, warehouses and cold storages, grading facilities, processing units and collating market intelligence – but all this mainly in the cooperative sector.

Retailers who Financial Chronicle spoke to said off the record that they are forced to sell vegetables at subsidised rates. If they didn’t do that, they risked cancellation of their direct marketing licences.

“We do not have any choice but to sell at low prices. This does not increase our margins or footfalls. So vegetables earn very little revenue and almost no profit,” says a Mumbai-based retailer.

Organised retail find it an enormous task to ensure quality and maintain freshness. Equally difficult is to expose the customer to innovative technologies.

Add to that location and space, says Sushmita Paul, marketing head of Star Bazaar. Indians don’t travel big distances to do their daily shopping, preferring the nearby store or vendor.

What of kind of back-end Star Bazaar has is something she refused to share. But she did say Star Bazaar looks at buyer behaviour before laying out stores.

Nothing unique about that: every organised retailer worth his/her salt claims to do exactly that – but still ends up looking sorry.

Here’s a consumer perspective: Sohini Sengupta, 34, a software person in Kolkata, does not buy fruit and vegetables from supermarkets because they are not always fresh. Even pricewise, they are not attractive.

“Instead, it is more convenient to buy from the roadside vendors. In the evening you can actually get a better bargain,” she points out.

Piyush K Sinha, professor of marketing at IIM Ahmedabad, speaks of the shoddy way fresh fruit and vegetables arte stocked in organized chains. “Inconsistent supplies often mean stockouts are common, irritating the customer.”

Govind Shrikhande, CEO of Shoppers Stop, agrees. In the fresh produce business demand outstrips supply and gives less than 20 per cent of the revenue of HyperCity, the supermarket chain of the Raheja group.

Problems identified by Mark Ashman, CEO of HyperCity, are: getting consistent quality, getting imported quality stuff and dealing with perishable products. Getting profits too is not easy, for HyperCity, it seems. It was in a loss in April-June last year; and in a bigger loss the same quarter this year.

For all their warts, retail chains remain upbeat about the fresh produce business. Why? Barua answers: “Fresh fruits and vegetables are a key for footfalls, frequency of purchase and the image of freshness and quality a store can convey.”

For Walmart too fresh produce is critical. Its ‘best price’ modern wholesale stores have significant membership in the fruit and vegetable category from business- members such as hotels, restaurants, caterers, institutions and small resellers. “We offer them better prices too,” claims the Bharti Walmart spokesperson.

Senthil Natarajan, MD of Kovai Pazhamudir Nilayam in Chennai, is not worried about government stores selling cheap. “Our target customer is different. We cater to the middle and upper middle classes who want a variety in what they eat. The government stores sell just essential stuff,” he exults.

May be that’s the way to go. The retail supply chain needs to add variety in terms of niche products which would bring in committed customers.

(With inputs from Trushna Udgirkar in Hyderabad, Sangeetha G in Chennai, Vikas Srivastav in Mumbai, Michael Gonsalves in Pune)