Marketing heads of leading Indian food and grocery brands and retailers engaged in a thought leadership session moderated by Kabir Gossain, Customer Director – Modern Trade, Unilever and Kamaldeep Singh, President, Food Business, Future Group. The debate centred on the rapid expansion of modern trade in tier 2 and 3 cities, the implications for food brands (from large brands to startups) and the evolving paradigms in the relationship between modern trade and these brands as they penetrate the hinterland.
Trends indicate that the Indian retail sector is headed for an exponential phase of growth, with modern trade expanding its reach and influence to tier 2 and 3 cities to explore new potential. Growing awareness, higher disposable incomes and aspirations make these regions hotbeds of opportunity for modern retail. Moreover, real estate costs are estimated to be 30-40% lower than the cities and players with first mover advantage stand to gain.
The total Indian retail sector was estimated at around US$ 641 billion in 2016, and projected to grow at a CAGR of 10% to reach US$ 1.6 trillion by 2026. Modern trade, on the other hand is expected to grow at twice the rate (20%). Food and grocery garners the largest revenue share in the retail sector and accounted for 16% of the India’s GDP. In 2020, food and grocery retail is expected to account for 66% of the total revenue in the overall Indian retail sector.
Modern retail in India is expected to nearly double in size (from 2017 levels) to reach Rs 1.72 lakh crore by 2019 in the top 6 markets of India, largely driven by an omni-channel push, according to a report by the Retailers Association of India (RAI) and property consultancy firm Knight Frank India.
As modern retail in the food and grocery sector expands to tier 2 and 3 cities, certain strategic realignments become imperative for both manufacturers and retailers. New customer-centric value propositions are being developed to cater to customers in these regions across segments – high end retail, convenience stores, wholesale channels and e-commerce. Apart from this growing customisation, adequate availability and freshness of food products is a major challenge that players across the supply chain have to address collaboratively.
This story is from the March 2019 edition of Progressive Grocer.
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This story is from the March 2019 edition of Progressive Grocer.
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