The New Recipe For Food Bazaar: Larger Spread, Contract Farming

Mumbai: | Updated: May 27 2003, 05:30am hrs
Rewrite rules and retain values. Thats the maxim which Pantaloon Retail (India) Ltd follows. And Food Bazaar, part of the Pantaloon group, is looking to imbibe both as it looks to follow a high growth trajectory. New outlets, private label programme and re-engineering the supply chain management form part of its game plan to consolidate its position in the country.

The Footprint
Food Bazaar after its presence in Bangalore, Mumbai, Hyderabad and Kolkata is looking at other cities in the coming months. By the end of May, Food Bazaar will launch an outlet at Gurgaon. In June, Mumbai will have the third Food Bazaar outlet at Vashi. In July, Food Bazaar will make its presence in Nagpur and September will witness the launch of the second Food Bazaar outlet in Bangalore.

The idea is to have a pan-Indian footprint and under this all major metros will be covered. By the end of 2003-2004, Food Bazaar will have nine outlets across the country with expansion in other smaller towns and cities on the anvil, said Pantaloon Retail (India) Ltd chief (business development) Ambrish Chheda. By end of 2003-2004, Food Bazaar is projected to touch a turnover of Rs 100 crore from the nine outlets that would be in operation.

Contract Farming
Food Bazaar is looking at the possibility of entering into contract farming agreements with large farmers to procure products across the country. This would enable it to exercise greater control over pricing as well as quality of the produce as it makes further forays into the country, feels Mr Chheda.

Recreating The Sabzi Mandi
The novelty of Food Bazaar, according to Mr Chheda, is the wide variety of merchandise it has on offer. The retail outlet has on offer 12,000 SKUs (stock keeping units), which it claims is larger than the normal 4,500 SKUs practised by other retail outlets.

To adhere to the touch-and-feel habit of Indians, when it comes to buying products, Food Bazaar has recreated a sabzi mandi (vegetable market) kind of ambience for vegetables and fruits. Thus the customers are able to pick and choose the vegetables instead of just having the option of packaged products. We have tried to retain the concept of sabzi mandi, which is so much part of the Indian culture, while offering modern amenities like ambience and space to customers, said Mr Chheda.

Each section within an outlet has been segregated with names like Hungry Kya for food products and Head to Toe for personal care products in order to ensure a distinct identity.

Supply Chain Management
The idea of operating like a sabzi mandi for products like onions, potatoes, tomatoes and others, is not just restricted to the ambience at the various outlets. Food Bazaar operates like a semi-wholesaler, directly procuring the produce from the wholesale market. Food Bazaar cuts out the various intermediaries and purchases the wares directly from the wholesaler or the farmer. It also has in place a mechanism to monitor the price fluctuations in the wholesale and semi-wholesale markets on a day-to-day basis so that there is no discrepancy in its pricing.

A retail enterprise management system is in place, a result of four years of work and investment of Rs 18 crore. The system developed in-house enables the company to manage its inventory and also track daily sales across various outlets in the country.

Private Label Programme
As is the practise of retail outlets worldwide, Food Bazaar also has in its portfolio products like tea, salt and spices, which are sold under the brand name Food Bazaar. To offer competitive pricing for its brand products, Food Bazaar has tied up with tea gardens to source tea and Super Salts Ltd, Indias largest salt refinery, for salt.

Food Brand tea is available at almost 25 to 30 per cent lower than the market price of top brands and our iodised and low sodium salt is available at 30 to 60 per cent lower compared to competitors, said Mr Chheda. Over the next six months, Food Bazaar would launch products like wafers, basmati rice, pickles, jams, marmalades, squashes, dals and pulses.

Mr Chheda clarified that the strategy was not to comprise the labels of other companies on the shelf, but to expand sales within that category. The share of Food Bazaar brands have been additional and in no way have hit sales of other labels. Customers will still opt for well-known brands depending on their preference, he added.