Retailers find growth in rural India
Lush green fields all around. The distant roar of tractors. The gurgle of piped-in irrigation water. And in the middle of this pastoral setting: an imposing store selling a variety to products including cosmetics fertilizers, seeds and toys.
“I don’t need to go to the nearest town anymore,” said 60-year-old Ranjit Singh, a local farmer who has been a regular at this rural department store for the last three years. “All my household stuff -- grocery, agricultural commodities, my mobile phone and even the fuel for my tractor -- is acquired here.”
Welcome to rural India, the newest area to feel the retail boom this nation is witnessing.
The store, Hariyali Kisaan Bazaar, is capitalizing on a demographic reality here in the world’s second-most populous country. Despite India’s reputation abroad as a high-tech powerhouse and call-center magnet, more than two-thirds of its 1 billion people still live in the countryside, scattered among 627,000 villages.
Vast numbers of these residents of India’s hinterlands remain mired in desperate poverty, subsistence farmers whose lifestyles are little changed from those of generations past.
But alongside them is a growing segment of rural dwellers of increasing means and spending power. Agriculture accounts for 27% of India’s gross domestic product and 67% of the country’s jobs. A study by the National Council for Applied Economic Research estimated that the Indian countryside had as many households of middle income and above as urban areas and twice as many households of lower-middle income.
That makes the countryside an appealing market for retailers willing to cater to agriculture-oriented customers and cope with India’s often-dismal infrastructure.
DCM Shriram Consolidated Ltd., a conglomerate with 40 years of experience in the Indian agricultural sector and annual revenue of $625 million, launched its chain of Hariyali Kisaan Bazaar outlets in June 2002. There are now 70 stores dotting the states of Uttar Pradesh, Punjab, Madhya Pradesh, Rajasthan, Andhra Pradesh, Uttarakhand and here in Haryana.
The stores tailor their inventories to the needs of local farmers, selling clothes, footwear, animal feed, irrigation equipment and even insurance.
The stores also use the promise of better quality control to win over customers who have often been unsure of the reliability and quality of goods and services sold by less scrupulous shops. Shoddy and adulterated goods are a problem in India’s countryside.
“We used to buy petrol from shopkeepers locally ... never a gas station. Very often, they mixed kerosene with the petrol,” said Pramod Kumar, a 33-year-old farmer here in Lathi Dhanaura, a village in Haryana about 100 miles north of New Delhi. At the HKB store, Kumar added, “we get quality items at the best prices.”
Suresh Kumar (no relation to Pramod), 25, who grows sugarcane, grams and lentils, said that in the markets of the nearest township, Ladwa, he and his fellow farmers from about 120 surrounding villages were often forced to buy whatever fertilizer was available.
“We did not even have the choice of buying the brand of agricultural inputs we wanted,” Suresh Kumar said. “Moreover, bills or receipts were never issued.”
Each HKB store usually operates in a catchment area of about 60,000 to 80,000 acres of farmland with about 15,000 to 20,000 households, said Vikram Shriram, DCM’s vice chairman and managing director.
“HKB is unique as it embodies some of the key focus areas for India’s rural development: investment in rural infrastructure, improving farmers’ productivity and profitability, providing urban amenities to rural areas, aggregation of farm produce, access to information and use of information technology,” Shriram said.
Many analysts say Indian farmers have been hampered by a lack of objective and timely advice on best agricultural practices, resulting in far lower yields from their fields than they might otherwise achieve.
At the Lathi Dhanaura HKB store, Jhabar Mal Yadav heads a team of three agronomists who provide 24/7 technological support to farmers.
“One of us usually stays at the store, while the other two venture out to the fields, delivering agri-advice to the farmers and ensuring adoption of modern practices,” said Yadav, 34, who holds a doctorate in agriculture. “Through village-level meetings and crop seminars right at the fields, we tell agriculturalists which varieties of sugarcane and [rice] paddy to plant.”
Agriculture and rural India have also beckoned Amway India, a wholly owned subsidiary of Ada, Mich.-based Amway Corp., one of the largest direct-selling companies in the world.
Amway India, established in 1995, began commercial operations in May 1998 and has emerged as the largest direct-selling, “fast-moving consumer goods” company in India.
In 2001, the company introduced APSA-80, its only product for the rural market, a solution mixed with pesticides to enhance their effectiveness. Rajat Banerji, a spokesman for Amway India, said the solution commanded a market of more than $5 million in India and, besides its agricultural application, had been used in other interesting ways, such as lessening the dew on the field during the 2006 ICC Champions Trophy cricket matches in Mohali, Punjab.
To boost sales, Amway India began a program in which a sales van fully equipped with a generator, projectors, a digital screen, a public address system and display materials runs through villages on schedules and routes decided in consultation with local Amway representatives.
