Archive for the Category Business

 
 

Competition mapping

I was recently reprimanded and asked to delete couple of casually clicked fruit and vegetable display photographs at a French retailer’s hypermarket in Muscat.

Can a retailer keep a secret as innocent as fresh produce display that, as a customer, I wanted momentarily to capture for posterity. How much this retailer would have gained (as free publicity) or lost  (trade secret) through those photograph of beautiful display by local staff is anybody’s guess.

Someone has rightly said – ”Retail is combat sport”. The biggest problem with retail is lack of transparency of the business. Sam Walton spent thousands of hours inside his competitors’ stores. It’s virtually impossible to have any trade secrets in retailing. Your competitors can walk into your stores and, in about 15 minutes, understand your entire business-model advantage and how to replicate it. There are very few industries that are as openly transparent, and that’s problematic for retail business.“Location, location, location” and “retail is detail” does not seem too much of a competitive advantage. Perhaps, because of this, retail is a low margin business with little margin for error.

Growing vegetables in Oman

National Company for Agricultural & Livestock Development LLC. Nothing unusual about this Omani company’s name. Agreed. Nothing is unusual about Mr Abdus Sattar Basra, too who manages this company.  Except that he is a Kapurthala born poet at heart, taught agriculture till mid nineties in Oman after coming from Pakistan in 1961. It is amazing that he has single handedly transformed the 100 odd acres of barren land in proximity of sea (high humidity) into an all year round techno-production heaven for all kind of vegetables.

Hats off to you Mr. Sattar and to your grit and determination. You have really shown that environment is no limitation if  you want to do it and know how to do it and have patience to harvest the fruit of your labor.

Ideas for fresh produce chain run by the poor for the poor

In the age of supermarkets, traditional bazaars and street vendors are still major players in fruit and vegetable distribution if one considers quantities sold, distribution reach and employment. Yet supermarket numbers are increasing as a result of incentives that promote ideals of food safety and modernization, in stark contrast to their negative response to street vending, vendors and informal markets that are still mired with low returns.

Street vending and traditional markets generate more employment by volume of business than supermarkets, particularly for the poor. As the majority of the poor are concentrated in rural areas, and rely on agriculture and vegetable growing for the majority of their earnings, it is inevitable that changes to food production, distribution and retailing systems will have an impact on their livelihoods too.

Street vendors are also the main points of sale for poor consumer who rarely purchase in supermarkets because of many reasons like higher prices, inconvenient location, poor quality etc. Poor also spend significantly higher portion of their income on food items. So changes to distribution and retail systems for food have a strong impact on poor as consumers too.

With these cross linkages in mind it is imperative that some business model and structure should emerge that links the poor farmers, poor retailers and poor consumer. In nutshell, a fruit and vegetable procurement, distribution and retailing system established and operated by the poor to serve the poor.

In defence of middlemen – reverse thinking by a disintermediation expert

Lets be fair to the middlemen and the agents. Had it not been these much maligned folks, every nook and corner of India would have been deprived of their daily dose of Pan (Beetle leaves). Considering very high perishability and low value of this product, thanks to middlemen, this product safely reaches all corners of India and thousands of people in India get their employment and pleasure (daily quota of pan) still keeping the prices low for anyone to afford – that too without refrigerated transport. Can Reliance Fresh duplicate this effort? You bet..

This is not in defense of middlemen or an ode to them. This is reality and I know this better after spending 20 plus years in organized fresh produce retail in India with companies like Mother Dairy, Reliance Retail and Subhiksha with a brief to eliminate or at least reduce middlemen from food supply chain.

It is not incidental that all above said big fruit and vegetable retailers still by between 30-40% of fruit and vegetable supplies from these middlemen in wholesale market. Go and check their yesterday’s purchase records. History of Safal Market at Bangalore would have been different had it built itself on the strengths of existing middlemen.

A little known secret – Most of the times in a year, auction price of Potato from Agra (UP) at Azadpur Wholesale market is cheaper than the price at Agra itself even if the potato is arriving in this market from same belt. Same is true for Onions from Nasik. Well, it is wide inter-middlemen competition that drives down the price where as potato growers exploit the limited and thinnly spread traders at production source.

Using charity as a tool to achieve product standardization in fruit and vegetables in a country like India.

Every fresh produce grade sells in India. But not usually separately but as a mixed grade which is a nightmare to marketers. I want to use charity as a tool to achieve product standardization in fruit and vegetables in India. Any ideas on how to go ahead to build up a commercial project around this. Charity in broad sense means here using / selling low grade but perfectly edible cull fresh produce to low income groups / markets and marketing the rest to quality conscious high income buyers.

Objective is to achieve standard quality produce without any taking away any incentive away from suppliers which are small and medium farmers in our case. Premise is simple. All stakeholders need to be incentivized.

Stakeholder No. 1 – (Farmers) – They get full price (product plus sorting /grading charges) for their harvest at the production source. Full price is what they’ll get the wholesale market for their unsorted produce. 

Stakeholder No 2 – (Rich folks / Large Companies) – Charity givers – Providing inferior grade but perfectly edible to poor groups meet their social and community objectives.

Stakeholder No 3 – (Government) – Can provide some tax breaks to rich people / large companies while providing cheap / free nutrition to poor.

Stakeholder No 4 – (Retailers) – They get all standardized / saleable products reducing dump / shrink.

Stakeholder No 5 (Fresh produce Industry) – Standardized produce ensures better price discovery with more transparency and lesser price volatility. In fact industry shall be biggest winner of all.  

As Stakeholder No 6, if I put up my time, money and effort in operationalising the concept, I also must get compensated for the effort.  Therefore, the answer I’m looking for is – How to operationalise whole concept. Thought of using Internet for the purpose, at least to create an interface for all stakeholders except Government) but deciding against it because of almost negligible Internet penetration in rural India. More ideas that don’t add cost to the concept are welcome.