These are large, low cost, low margin, high volume self service operations designed to meet the needs for food groceries and other non food items. This format was at the forefront of the grocery revolution and today it controls more than 30% of the grocery market in many countries.
The most widely used definition of a supermarket is that of a store with a selling area of between 400 sqm and 2,500 sqm selling at least 70% of its merchandise comprising of foodstuffs and everyday commodities. Internationally the size of these varies from 8,000 to 20,000 square feet. ASDA, Safeway, Kroger and Tesco are some of the large international players. While there is no standardization on the parameters of what makes a supermarket in India, it is one of the fastest growing business formats in the country. Examples of supermarkets in Indian markets scenario are Nilgiri’s Food world, Subhiksha, Food Bazaar and Vitan.
Over the years, variations in this business model have also emerged – they include the superstore and the combination store. A superstore is larger than a conventional supermarket, with at least 25,000 items and more non foods, such as general merchandise and health and beauty care (GM/ HBC) items, while a combination store is a superstore and full time pharmacy with GM/HBC products accounting for at least 15 percent of sales.
Retail Snapshot focuses on two popular supermarkets in India:
Food Bazaar and Reliance Fresh>
Food Bazaar replicates the local market to provide the much important touch and feel factor that Indian housewives are used to in the local Bazaar. Its value proposition to the customer is ‘Ab Ghar Chalana Kitna Aasan’. The format can be termed as a discount supermarket, with the products being sold below MRP. Many of the stores are stand alones, but a few of the stores also exist as a part of Big Bazaar.
Food Bazaar offers a variety of daily consumption items, which include staples, soaps and detergents oils, cereals and biscuits. Private labels are an integral part of this format and some of the categories in which private labels exist are flour, ghee, chips, butter, ready mix powders, floor cleaner, scrubbers, hand wash etc. The share of private labels as a percentage of total Food Bazaar revenues has increased significantly and companies nearly 50 merchandise categories. It also witnessed healthy expansion during the year 2006-07 making its presence felt in nearly 26 cities. The total count of Food Bazaars as of December 2007 stood at 109 stores.
Reliance Retail Limited is a 100 % subsidiary of Reliance Industries Limited which is India’s largest private sector company on all major financial parameters with a turnover of Rs 118,354 crores (US$ 27.23 billion) Reliance Retail started rolling its stores in November 2006 and at the end of 2007, operated over 418 stores in over 17 cities spanning 1.5 million sq ft.
The formats that RRL operates in are Reliance Fresh, Reliance Digital for consumer durables and information technology, Reliance Mart – a Hyper Market, Reliance Trendz – the apparel store, Reliance Wellness – offering wellness products, Reliance Footprint – a footwear store & Reliance Jewels – jewelry store.
Reliance Fresh is the company’s brand for neighborhood fresh food outlets. Reliance Fresh is a supermarket which sells fresh fruit and vegetables besides staples, (pulses, flour, rice) as well the company’s in house brand, Reliance Select. The stores are spread over an area of 2,000 – 5,000 sq ft.
The company focuses on sourcing directly from the farm gate in order to avoid middlemen in the distribution process thereby passing on savings to the farmer, the end consumer and the shareholder. It sources fruits from Himachal Pradesh, sugar from Andhra Pradesh and Maharashtra and potatoes from Uttar Pradesh and Bihar. As a result, fruits and vegetables are made available at 15–40 percent discount to the market price.
Besides Reliance Fresh, the company also plans to launch larger format stores called Feel Fresh Plus which will be spread over 10,000 – 15,000 sq ft. The fresh Plus stores will stock fruits and vegetables as well as apparel, consumer electronics, FMCG items and even medicines. According to press reports, at the end of 2007 the company had 40 stores in all.