Extra efforts by big retailers

Stacked on the rear shelves of the just opened Reliance Fresh outlet in Hyderabad is a clue — exactly the kind retailers scour markets sniffing around for. Heaped in two black plastic crates are Puja flowers — chrysanthemums and the more expensive, but headier, jasmine.

Though slightly incongruous in this air-conditioned 2,300 sq ft outlet in the city of Hyderabad, India, with its aisles of wrapped vegetables, well stocked visi-coolers and bar coded produce, they are a clear sign of how modern retail is bending over backwards in the face of local tastes and preferences. On the shelves are four to five varieties of rice including a local favorite, and the number may go up to forty or more shortly. Small sample bowls are placed in front of each variety as consumers typically like to touch and feel the produce before purchasing.

The upcoming Reliance Fresh stores, part of Reliance’s ambitious retail initiative, will have separate non-vegetarian sections and offer home delivery, much like the neighborhood grocery stores. Onions, potatoes, tomatoes and other price sensitive categories are being offered in three quality grades, each a few rupees more expensive than the other, to serve all wallet sizes. In-house brands of staples rub shoulders with more expensive ones and cut vegetables and fruits are being sold alongside regular ones.

Hyderabad, where 11 pilot stores have opened is also being used to tweak the critical supply chain or the back-end, which ultimately enables global heavyweights like Wal-Mart to offer the cheapest rates and the widest choice of products. Reliance Fresh’s pilot farm-to-fork project currently uses 16 collection centers in and around Hyderabad to collect fresh produce. Be it cabbage from Bangalore or tomatoes from Madanpalli, 32 vehicles and around 100 people are involved in ferrying it to the processing center, equipped with cold storages and cold rooms, where it is cleaned, sorted and graded.

The pickups usually reach the processing center anywhere between 12 to 18 hours from collection. The earlier they are pre-cool, the longer is the shelf-life. As the retail sales grow and volumes pickup, the collection center may be fitted out to act as mini-processing centers. This is in addition to the fruits and vegetables it buys from local vendors and directly sourced regional specialties like apples from Himachal Pradesh. The emphasis right now is to ensure that whatever is available reaches stores fastest. But going forward, the retailer wants to work with farmers on what to grow and how to grow it best.

Reliance Fresh, which formally opened its doors last week, offers a glimpse into how food retailing is likely to shape up in this country. Already retail brands like Food World, Food Bazaar and Subhiksha are fighting it out in markets like Hyderabad, trying to outdo each other by offering the best prices, widest range and special promotions. While food, the largest part of any household budget, holds enormous potential, this is clearly a business that requires deep pockets and long waiting periods. A lot of things need to be got right, especially location.

Typically most of the everyday buying is done in shops that are in and around where one stays ideally walking distance and hardly any kilometers.

But the rewards for those who get it right can be gratifying as Reliance Fresh discovered — the puja flowers sold out within two hours of the store opening.