Rural Sales Better than Urban

Hinterland overtakes cities in FMCG consumption

Rural India Boosts FMCG firms sales

Rural FMCG Sales

I have actually stopped posting on this blog as I have shifted most of writing to rajeshaithal.blogspot.com. But today thought will try and keep this blog posted with interesting news links which come on rural marketing issues.

A few days back I saw a news item which said that for the first time rural fmcg sales growthhas exceeded that of the urban markets. It also tells us that Babool Brand of Dabur has grown by 35% in the rural markets.

Link to the article.

Rural Retail Options

Rural Hypermarts - ITC’s 'Choupal Saagar'

In the previous blog I had touched upon most of the options that would be available for retailing in villages, but I did leave out a new format being tried out by ITC. ITC is coming up with rural hypermarts, called 'Choupal Saagar'. The Choupla saagrs are aimed to become a multiple service provider for the villager, a single point where he can sell his produce and purchase consumables, insurance, farm inputs, and so on.

The first of these Malls has come up in Sehore MP. The number has gone up to 10 with another 9 in the pipe line according to http://www.itcportal.com. The estimated cost of setting up each choupal is around 5 crores with each mall spread across 5 acres. And the company has plans to open 700 such hypermarts across the country in the next ten years. The plan is to create a linkage between the echoupal and choupal saagar , and the same catchment of farmers who are engaged with the company for the sale of their products should also become the first customers of the choupal sagaar.

The obvious reality is that these malls have come up in the more prosperous areas of the rural country side, not in the far flung and isolated areas of the country. It is an experiment which many companies are watching with great interest and infact many of them have tied up with ITC to provide their services to farmers who shop at the hypermart.

It is said that the point where the farmer collects his money for the sale of his produce is located at the back of the hypermart. Designed such that the farmer has to walk through the mall, and thus break any hesitation that he might have and also see the products up for sale and perhaps on his way back also make some purchases.

Rural Retail Options

With retailing in a boom in urban India, it maybe is the right time to discuss about retailing alternative in villages of India. There is misconception that there are limited options when one comes to rural retail. Infact in terms of sheer variety the options that a rural consumer may have may not be bad in comparison to the urban consumer. Though the options in urban areas have increased a lot in the last few years. Coming back to the main issue, rural retail, here an attempt has been made to list out the various alternative retail options for a rural marketer and strategy there of.

There are basically five different options for a manufacturer to reach the consumers in villages first is the omnipresent grocery shops which exist in the rural areas, and there are close to forty lakh such shops spread across the six and half lakh villages. These grocery shops are not homogenous; they vary in their sizes, structure and buying preferences. And though generalized as grocery shops, in bigger do have specialised shops. No company planning to succeed in rural markets can do without planning for these shops.

The second retailing option is the one which has been studied and researched more than any other aspect of rural retailing that is Haats and Melas. The number of these Haats and Melas across the country has been put to be more than seventy to eighty thousand across the country. And there have been studies, which suggest that the villagers prefer these Haats to make their purchases to the village retailers.

The third retail alternative is the shops in the nearest small town. The village consumer tends to visit the small town or the district headquarters on a regular basis. The visits linked to his sale of agricultural produce or could be to purchase farm inputs and he combines his FMCG and durables purchase with this. So even if a company has a good direct coverage plan in place, it shouldn’t ignore the wholesale markets, and in certain categories like durables restrict their presence to the small towns itself.

The next alterative is the prevalence of mobile retailers in the villages. This is an area where there is paucity of reliable data. They are small retailers who move from village to village on cycles or on foot selling their goods to households. In certain categories like cosmetics and bangles they have a strong presence. The last option for retailing is a combination of various new and old outlets which have been set up for different purposes put to use to distribute products. The examples of these include ration shops, post offices, petrol retail shops and the newer formats like echoupal and other kiosk based options.

To develop a complete retail strategy in villages, one should plan to address most of these alternatives; he should have plans to tackle the wholesalers in the small towns, and the retailers in the villages and should have plans to accommodate the major Haats and Melas which occur in the area.

Impact of IT on Rural Marketing

Information Technology has an overwhelming influence on all the spheres of life; here we will try to look at the influence of IT on rural marketing in general and distribution in particular. Two examples have been discussed; one would be the use of GIS (Geographic Information System) and second would be emergence of rural kiosks.

First the application of GIS. The software is facilitating distribution in villages. Satellite images have been used to identify clusters of villages, their distance from the town and roads. Using this data decisions on where to set up distribution points, setting up distribution routes and which clusters to cover can be decided much easily.

In the last five years many companies like ITC, Parry’s, HLL have come up with rural kiosks, which is basically a net-enabled PC installed in a village. Though the main objective of setting up the kiosk is not distribution, like ITC's e-choupal is there as a procurement point and HLL i-shakti is an extension of its shakti scheme in rural areas. But once the infrastructure is in place, it will be and is being leveraged by these companies to sell their products and non-competing products from other companies.

The editorial in today's Economic Times (25th Oct , 2006)on BOP (Bottom of the pyramid) markets in economic times has triggered this write-up. In the editorial the author has been critical of the examples used by C K Pradhalad in his book "Fortune at the Bottom of the Pyramid". Rather than getting into identifying the faults with the idea proposed in the book I would like to focus my energies on what identifying the areas of the work which could be put use in rural marketing in India.
The first big plus of the book ha been that it has for the first time brought consumers with low purchasing power into lime light , and because it is being promoted by one of the foremost management thinkers of the world it is getting sufficient media attention. The basic proposition of the book is that don't ignore the consumers at the lower end of the pyramid and that corporations can collaborate with consumers to co-create products and services which could lead to a win-win situation.

To be continued …….

Rural marketing has been defined by different people in different ways , some people see it as the marketing of agricultral produce to urban markets, others see it as the marketing of products produced in urban areas in villages. There are a few others who take the view that handicrafts and other products produced by the rural folks is rural marketing.