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Big retail charms small towns

About a year after organised retailers hit the dusty trail to smaller towns, they are finding a broad market base as value-for-money shopping meets youth power courting a new symbol of enhanced lifestyle. Radhika Pancholi reports.

business Updated: Aug 26, 2008 21:09 IST
Radhika Pancholi

Shopping in a supermarket is no longer just for well-heeled metro citizens. About a year after organised retailers hit the dusty trail to smaller towns, they are finding a broad market base as value-for-money shopping meets youth power courting a new symbol of enhanced lifestyle.

Even big villages may be ready for an expansion paralleling Wal-Mart’s US success, and farmers are among a new tribe of smart shoppers, say industry insiders.

The Future Group’s value store Big Bazaar has been wooing customers in towns such as Sangli and Alwar, and now covers 56 towns and cities across country. These include places like Siliguri, Darjeeling, Meerut, Ambala, Ahmednagar, Bharuch, Anand, Hubli, Udupi and Palakkad – hardly the kind of places you would associate with self-service or credit card shopping.

“Smaller towns and cities in tier II and III category shows tremendous growth prospect for the organised retail industry.

These are the towns where aspirations of the youth are high,” said Rajan Malhotra, Big Bazaar’s chief executive officer.

“The competition will get hotter in the smaller towns and cities in about five years,” he said.

As much as 70 per cent of Big Bazaar stores are in the so-called Tier II and III cities. The retailer plans to add 45 to 60 stores in the current July-June financial year, most of them in specks on the map.

Delhi-headquartered Vishal Retail who already has a presence in 80 cities plans to raise this count to 120 cities by the end of this financial year.

“We are possibly the only retailer who has such a large footprint across the country. In fact it’s not just Tier II cities, but we have a presence in Tier III and Tier IV cities as well,” Manmohan Aggarwal, CEO, Corporate Affairs, Vishal Retail, told Hindustan Times.

Inflation has not affected sales either.

“Inflation does have a marginal impact but as value retailers, it is at these times that we can get the customer to come to our stores in droves because of the offers we give them,” reasoned Aggarwal.

Vishal Retail plans to invest Rs 300 crore this year towards its expansion plans.

Aadhar Retailing Ltd, a small joint venture between the Future Group and Godrej, where the former holds 70 per cent stake, has even courted villages – and shoppers include farmers, a class rarely associated with supermarket shopping.

“Aadhar provides farmers with solutions to problems regarding their agricultural output, which includes what kind of crop can they plant and when, along with techno-commercial suggestions to help them give a better output. We also provide them with insurance products to cover their risk and supermarkets for their daily needs,” said Arvind Choudhury, CEO, Aadhar Retail.

But he adds that both the merchandise and price points are different in rural areas.

Vishal Retail’s Aggarwal said customer tastes at their stores in cities such as Udhampur, Bhagwada and Badola were not very different from those in bigger cities such as Mumbai where the retailer has set up stores in suburbs such as Dahisar and Mulund.

“Not only did we become the preferred destination for shopping for value seeking customers but were also able to attract new customers through Food Bazaar’s Monthly Bachat Bazaar (savings plan). We also took a conscious decision to not increase the cost of our private label brands for the next six months,” Malhotra said.