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Retail giants get the logic, woo middlemen
Published on Wed, Mar 19, 2008 at 20:12, Updated on Wed, Mar 19, 2008 at 20:19 in Business section
Tags: Retail, Big Bazaar , Mumbai
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Mumbai: Last year, modern retailers and traditional traders seemed to be each other's worst enemies. But things seem to have cooled off and they are now even working together.
Chairman, Aditya Birla Group, Kumar Mangalam Birla admitted that "farm to fork" will not be a reality in India any time soon. "They will all be part of the value chain in one form or the other,” he said.
But will the Aditya Birla group bring them in officially and hire them as sourcing agents? “Well that's something we will look at very favourably," said Birla.
He's not the only one. Most big retailers like Reliance, Godrej, Subhiksha and the Future Group's Big Bazaar have also decided that traditional merchants have many benefits to offer.
Take for example Shivaji Baburao Dhembre who operates from the Vashi APMC.
Everyday for the last six years, he has been supplying 15-20 tonnes of vegetables to Big Bazaar's 11 stores in Mumbai.
"I have been in this business for the last 40 years and have built up a network that gets me the best vegetables from across the country, which I then supply to Big Bazaar,” he says.
It’s this sort of network that no company can hope to build overnight. Especially in a country where most farmers have less than five acres of land, where collecting, grading and sorting the fruits and vegetables takes years to master.
Companies, it seems, have realised this.
Says Arvind Chaudhary of Food Bazaar, "I don’t think today any corporate or anybody can replace them with the lower cost. If anybody tries to do that the cost would be higher."
And it is not just the Future Group. Companies like Reliance Retail and Aditya Birla retail - who are trying to build up their supply chains - have discovered that intermediaries offer value.
They have recently started sourcing vegetables from local traders.
The wholesalers, specially at the Vashi APMC, say the initial months of supply will perhaps build a sense of trust and lay the ground rules for a working relationship.
Once that phase is done, they'd prefer it if the large corporate houses were to sign long term contracts with them.
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URBANEYE
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Oh, Jesus give us our daily bread and subzee, as fresh & cheap as possible .. Let Ambanis, Tatas, Godrej,
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All MNC use local traders first then they dump them when their network gets stronger.
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