IndiaRetailBiz

In a signed article, appearing in the Economic Times (11th February, 2006), Kishore Biyani, CEO, Future Group, has unveiled a plan to tap rural markets, which at 55% of estimated total retail market size of US$ 300 billion offer a retailing potential of US$ 165 billion. The biggest challange in exploiting this opportunity, however, comes from the the sheer spread of the market. The market is scattered across a large number of 627,000 villages, which are seperated by long distances from each other.

Even if some one initially tries to address only 50% of the rural population, with 60% of wealth, accounted for by 17% (or, over 100,000) of the villages, the number of customers a rural outlet would be able to attract may not be economically viable.

Biyanis, who were looking out to evolve a retail format to capture a significant part of this potential, decided to conduct extensive research on rural consumption patterns. After two years of studies, they have come out with the idea of partnering with the rural retailers and micro entrepreneurs, by creating KB’s wholesale market, which will act as rural infrastructure hubs connecting small manufacturers with small rural retailers.

Studies have shown that a rural retailer to meet his needs is required to not only travel a long distance to a city market but has to also visit multiple markets, where only a few clustered wholesalers and intermediaries dominate the wholesale markets. Except these intermediaries, every one else, be it a consumer, a retailer or an agri producer is at a disadvantage. KB’s Wholesale Market hopes to correct this dismal situation by increasing efficiency and building transparant price discovery mechanism.

Before rolling out on a pan-India basis, KB’s Wholesale Market will try to learn frominitially commencing the operations in Uttar Pradesh and West Bengal towards later part of the year.

Biyani believes that while the challenges of rural markets are humongous, so are their rewards. The only way to leverage this huge opportunity is through striking partnerships with the stake holders living in these areas. The Future group hopes to create a winning proposition, by understanding the needs of these stake holders ( farmers, rural retailers and micro entrepreneurs) and then delivering to them the advantages and efficiencies of organised retail.