Bon appetit -- Boom in 2001 in grocery and foods business  ( January '1,2001, FE)

The retail boom is here to stay. It's just that in 2001, the focus of organised retailing will shift from non-food sectors to nascent sectors such as food and grocery (F&G) and home improvement. Entertainment, books and music will witness the emergence of organised players in large cities. As per the growth projections of KSA Technopak, the organised retail industry will grow six-fold from the current Rs 5,000 crore to almost Rs 30,000 crore by 2005.

``The share of the organised sector in total sales will grow from one per cent now to six per cent by 2005,'' says Mr Dipanker Halder, manager, KSA Technopak. ``Expansion of the retail sector is expected to continue, with the market benefitting from foreign international retailers who have recently started to enter the market,'' adds the spokesperson for Cushman & Wakefield, a Delhi-based real-estate consultancy. Food & Grocery: If the last two years saw a retail boom in the non-food sector, 2001 is expected to see an expansion in organised food retail business. The overall share of F&G retailing, including food services, is likely to grow dramatically in the next 5-7 years from the current 0.25 per cent to about 5 per cent of total spend on F&G in India, which is valued at about $4.5 billion or about Rs 20,000 crore.

Currently almost the entire F&G retail market is unorganised and fragmented. However, the scenario, predict industry pundits, is likely to change with the organised F&G retailing on the threshold of rapid expansion starting 2001. Consider: From the current Rs 600 crore comprising just five regional chains, organised retail food business is going to swell to Rs 6,000 crore with about 20-30 national chains coming up by 2005. Organised food services-chains like Dominos, Pizza Hut, McDonalds -- too will leap from the current Rs 200 crore to a Rs 1,500 crore segment with 30 to 40 national chains operating by the year 2005.

Modern formats go national : Modern formats in F&G are likely to spread all over the country in the year 2001 in comparison to the current scenario where the spread of organised retailing is largely limited to South India, particularly Chennai, Hyderabad an Bangalore which have seen the emergence of chain stores or large format stores. Foodworld plans to have 60 stores across the nation by March 2001.

Chennai-based Subhiksha plans to expand its network from 62 stores to 500 stores by 2003. Similarly, localised chains like Nilgiri's, Vitan and Nanz are also seeking national penetration. Adani Exports Ltd, which recently acquired a 2,500 sq ft single store `V Ravji's supermarket' in Ahmedabad, is planning a nationwide chain of modern formats too. Size and service will matter: The new format of grocery stores are likely to be 4,000 square feet in size and serve a catchment area spread over a 1.5 to 2 km radius as opposed to the kirana store which serves not more than a km away.

The product range will be better and bigger -- neighbourhood grocer: 800 to 1,500 SKUs, versus Foodworld: 3,500-plus SKUs -- range, quality, convenience and superior shopping experience. However, like the kirana store, they too will leverage cheap labour for convenience services like home delivery. Home improvement stores: Another tempting retail opportunity in 2001 is going to be the home improvement category, predict industry analysts.

Though currently the retail structure in this category is fragmented and unorganised with very few organised players such as Gautier, Bhutan Board and The Home Store, some corporate and individuals are planning an entry soon. Already two corporates -- Amit Judge (Turner Morrison)-promoted retail store Arcus and Karunai Group-promoted KSS Homepro have set up huge home construction retail stores in India.

According to industry sources, B&Q (UK), Home Depot (US), etc could also come to India in 2001 with partners. Spanish company Mondragon Cooperations Cooperativa (MCC) is also planning to open furniture stores all over the country soon. Premium shopping malls: Development of `premium' malls will continue to happen in 2001. KSA estimates that the total space is likely to go up from 50 lakh sq ft to 75 lakh sq ft in the next two years. A significant fall-out of the emergence of malls will be the trend of smaller retailers upgrading their establishments and emulating practices from the mall experience. More good news: expect rationalisation in retail real estate prices in 2001. Says Mr Haldar: ``A lot of players will opt for revenue-sharing deals for example.''