Retail bigwigs see 70% drop in pulses demand

Written by Mona Mehta | Mumbai | Updated: Nov 23 2009, 07:15am hrs
Large retailers are now witnessing instances of downtrading in pulses. Customers are moving to lower grades of pulses at branded hypermarkets and retail stores instead of the more expensive ones, owing to high pulse prices. This has resulted in retailers seeing a drop of around 50%-70% in demand for expensive pulses, according to industry experts.

While the prices of toor dal have gone up from Rs 80 per kg three months ago to Rs 120 per kg in November, urad dal is available at 90 per kg, compared with Rs 70 per kg priced three months ago (a hike of nearly 28%). Moong dal prices have also gone up from Rs 70 three months ago to Rs 92.

According to a Future Group spokesperson, With the increase in the price of pulses, we are seeing instances of downtrading at Big Bazaar and Food Bazaar stores and customers here are moving to a lower grade of toor dal instead of the expensive varieties. Customers are also switching to cheaper pulses like vatana , or chana .

Ashutosh Chakradeo, head, food, grocery and supply chain, HyperCity Retail (India) Ltd said, The sales growth of pulses has been sluggish in terms of volume. Since most varieties of pulses are a part of the customers monthly basket, the impact is more due to some customers buying lesser quantities or downgrading by buying a lower quality. In such a scenario,

Hypercity has introduced more variety and options among its private brands to enable customers to get a better value.

Since the last seven months, retail players have witnessed a decline in footfalls for grocery shopping at neighbourhood hypermarkets and retail stores during weekends.

A Reliance Retail official said, However, these footfalls started declining by about 10% to 15% for expensive pulses. Amidst this scenario, consumers are finding ready-to-eat snacks as an alternative option, and this includes cheaper pulses.

Kumar Rajagoplan, chief executive officer, Retailers Association of India (RAI) said, Under such circumstances, the government should ensure that there is a constant supply of various pulses, instead of fluctuating supply so that the working capital of retailers does not get blocked. Due to high pulse prices, consumers are delaying their purchases with the hope that by January 2010, when the new crop sets in, pulse prices will fall again.

Usually, branded retailers stock groceries and food products for a limited period, based on the demand they would experience. This could either be based on a week-on-week basis or on a month-on-month basis. But certain retailers may now look at increasing the stock of cheaper pulses, rather than expensive ones, based on demand, Rajagopalan added.