How rural retail has grown over the years

In 2003, when Godrej Agrovet opened its first Aadhar store in Ranjini town, 70 kilometres from Pune, the biggest challenge it faced was finding the right people to run the store, even though it was willing to pay a decent salary.

The company quickly realised that there was a shortage of qualified professionals and started its own training programme (known as Aadhar Gurukul) to provide training in retail and agriculture.

"We pick up locals (probably a matriculate or higher secondary qualified) and provide three months training to them after which they are absorbed at our stores," says C K Vaidya, managing director of Godrej Agrovet.

Along with urban centres, organized retail is rolling out in small towns and villages of the country as well. Though rural retail is being done by companies that have had strong linkages with farmers for several years (Tata Chemicals, DCM Shriram Consolidated, Triveni Engineering and ITC), the learning experience has been very different from urban retail.

There were no case studies to fall back on, no experts or advisors to turn to. The companies have learnt the nuances of the business "on the job". It is, by all accounts, a fascinating attempt to study the mind of the rural consumer.

L S Rathore, the chief operating officer (agri-business) of Tata Chemicals, which runs 629 rural outlets by the name of Tata Kisan Sansar (TKS), says that his company found the farmer was not willing to buy fertilizers to improve his yields unless he was assured there were buyers for his produce.

"Why would he [the farmer] invest in increasing his productivity with better inputs without seeing an assured market," he asks. Therefore, the company has tied up with Total Produce, an Irish company, to market the fruits and vegetables produced by farmers around TKS stores.

Ajay Shriram's DCM Shriram Consolidated Limited (DSCL), which runs a chain of rural stores under the Haryali Kisan Bazar name, recently felt the lack of proper medical amenities in areas where the company's stores operate.

"We have tied up with Fortis Healthcare to open a primary healthcare centre at one of our stores in Punjab in another two months. After evaluating the response, we will consider opening more such centres at our stores," says Shriram.

Rural retail stores have continuously evolved keeping in view the constantly changing demand of the consumer. "At our Hariyali stores, the number of stock keeping units (number of items available) has gone up from 1,200 in 2002 to 10,000-15,000 now," says Shriram.

Apart from the manpower crunch, rural retailers face other problems like poor infrastructure and low purchasing power.

While infrastructure is one area where companies cannot do much, they have been providing better farm inputs like seeds and fertilisers in addition to free agronomical services to help the farmer raise his productivity.

"With the growth of rural income through higher productivity, the growth of rural retail will follow," says Tarun Sawhney, vice president of Triveni Engineering and Industries, which runs rural stores under the name of Triveni Khushali Bazaar.

Companies claim that farmers in the area around their stores have registered a growth in productivity. Hariyali encouraged farmers to inter-crop pulses and vegetables with sugarcane. This saw incomes grow by as much as Rs 8,000 per acre per season.

Understandably, rural retail has faced no opposition from any section of the economy.