A vegetable vendor in his bright orange shirt, black trousers and orange cap leisurely pushes a refrigerated cart inside a posh locality in Gurgaon early morning, ringing bells door-to-door, selling vegetables, fresh from the farm.
Earlier an unorganised labourer, this vendor now works for a cold chain company, Acme, which has entered retail with a pilot project.
While retail chains mushroom across the country, pushing up rentals in their scramble for prime space, door-to-door selling could be an extremely cost-effective format that does away with the need for costly prime real estate.
The rental-to-revenue ratio of retail outlets in the food & grocery segment is a high 20%. ?While retail chains, which source around 25% of their produce from farm, command a margin of 14% on their sale, a cold chain company, which sources its entire produce from farms, can make up to 30% margin,?? said Pinaki Ranjan Mishra of Ernst & Young.
Though a few companies like Godrej and ITC have made abortive efforts, analysts say a slightly more evolved door-to-door formula should be successful, given its inherent advantages like convenience over retail shops.
Experts note that pilferage is minimal in this form of retail trade, which provides remunerative and secure jobs to unskilled workers. Even the wastage component in selling the fruit & vegetables, which is 12-14% in retail stores, comes down by 2-3% since door-to-door sales are higher than in a store. A saving of even 2-3% in such a volume-driven segment of retail can be a big saving for retailers, notes Pinaki.
The fruit & vegetables trade is a top component of retail trade, India being the second largest producer of them.