Innovation for Inclusive Growth

The Hariyali Case

Sanjay Chhabra
Head Retail Operations
Hariyali Kisaan Bazaar
3
rd
International Conference on Linking Markets and Farmers
Public-Private Enablers of Market Driven Innovations
Contents
The Indian Rural Market
Innovation for inclusive growth
The Hariyali experience
Challenges
The Indian Rural Market
- The producer
Only farmers can beat inflation : FM
.inflation is a larger social issue that could be tackled in the long run
through increased supply of farm products..
.Just as an augmentation in the supply of inputs is the durable answer
to industrys growth, increased supply of inputs is the answer for
agriculture too. The laws of economics are not different for
agriculture..
Mr.P.Chidambram,
Finance Minister
9
th
March, 2007
Farms are not islands
..It is no secret that agriculture with less than a fifth of the GDP has
to provide livelihoods for around three-fifths of the population.
.The immediate challenge is on the food front. Shortfall in production
has affected supplies & prices..
.But we donot need a fresh dose of the Green Revolution
Strategy...The Green Revolution instruments to encourage
farmers will no longer be effective
Mr. Narender Pani
9
th
March, 2007
The Indian Rural Market
- The consumer
The Indian Rural Market
The magnitude
12% of worlds and 70%
of Indias people
2/3
rds
of Indias middle
income households
1% increase in Indias
rural income increases
buying power by Rs.
10,000 crs.
The Consumer Classes
The rich (<0.5%)
The Climbers & Strivers (~5%)
(Growing at over 15%p.a.)
The Aspirers (95%)
(THE FUTURE MARKET)
The Rural Consumer Class
Rural India too has its share of The Rich
However, most of rural India would still comprise
The Aspirers.
Growing at a fast pace, this is the FUTURE MARKET,
creating buyers of quality products and services
Rural Occupations
0
10
20
30
40
50
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Urban
Rural
The Shifting Income Distribution
0
100
200
300
400
Low Lower-
middle
Middle-
high
Low Lower-
middle
Middle-
high
Urban Rural
2001-02 2009-10
(Million people)
Increasing Purchasing Power
0
2000
4000
6000
8000
10000
1989-90 1994-95 2001-02
Urban Rural
Rural purchasing power is growing at a faster pace
PCI
(Rs /
annum)
Is a value seeker
Seeks comforts and amenities
Does not wish to be seen as the
deprived cousin.
Does not experiment easily but
this does not mean that he
would not change.
Values local relationships because
of unfavourable past experiences
The Rural Consumer
The magnitude of the hinterlands potential is beyond doubt.
The Aspirers market is becoming increasing attractive given
its growth rate.
Agriculture remains the primary source of rural livelihood
The rural consumer seeks the means and avenues to meet his
aspirations
Inference
Existing Market structure
Village shops, haats satisfy
demand
Usually present in 500+ people
villages
Weekly Haats spread over 2-3
acres , more than 300 stalls
selling everything from animal
feed to local medicines
A relationship exists between
the locals and local retailers
Traditional Retail
Lack of depth and variety within a category
Look-alike Locals dominate the market.
Few trusted, national brands
Malpractices prices higher than MRP, faulty weights and
measures, consumer schemes not passed on
Would often misuse their position as the only source of
information.
A poor shopping ambience
Shortcomings of Traditional Retail
Innovation for Inclusive Growth
Making a difference
The Hariyali Experience
Making a difference The Hariyali Experience
The Trusted Rural Business Hub
Help the customer increase his income, educate the customer,
before you sell to the customer
Making a difference The Hariyali Experience
Triggering Rural economy
Creates Purchasing Power by focusing on increasing Income Levels
Making a difference The Hariyali Experience
Enabling implementation of New Technology in Agriculture
Making a difference The Hariyali Experience
Adding the critical service element
Making a difference The Hariyali Experience
Forging New Market linkages
Making a difference The Hariyali Experience
Giving the Customers the right to choose
Making a difference The Hariyali Experience
Assured quality & quantity
Making a difference The Hariyali Experience
Providing Urban Amenities in Rural Areas (PURA)
Making a difference The Hariyali Experience
Deploying IT for real empowerment
Making a difference The Hariyali Experience
Creating Local Employment
Making a difference The Hariyali Experience
Improving the quality of life
Rural Businesses
Challenges
Rural Business
Challenges
Low density, high fragmentation market
85000 1085 Population per market
3768 627000 Markets
320 680 Population (in million)
Urban Rural
500000 340000 Less than 500
1470000 230000 Between 500 and 2000
1330000 60000 More than 2000
No. of retail outlets No. of villages Population range
Rural Business
Challenges
High gestation business
Increasing costs of land
Pace of expansion
High operating costs
Low margin of agri-inputs
Increasing manpower costs
Low purchasing power of consumers
Rural Business
Challenges
High effort business
Need for localisation due to regional variations in
taste and consumption patterns
Adequately qualified manpower
Inadequate infrastructure and Wide geographical
spread make supply chain and logistics benefit
difficult to achieve
Low literacy and education levels of consumers
Number of government approvals
Payment processes
Thank You