hariyali kisaan bazaar - rural marketing (retailing) in india

Hariyali Kisaan Bazaar

ABHISHEK BHOWMIKANAND GUPTAARJUN PAREKH

MIRAL SHAHROHAN BHARAJ SYED MUJTABA

Indian Farming

2nd Largest growing area in world (141 Million

Hectres)

Largest irrigated crop area

Among top three global producers of

major crops

Largest and fastest growing poultry

Commercialization in developed economies and livelihood for Indians.

Still using old and traditional technology.

MSP-driven Procurement System

Unreliable Buyers

Too Many Intermediaries

Lack of Technical Know-How

Poor Quality of Inputs

Credit Trap

Fragmented Market

FARMERS LACK OF COMMERCIAL ORIENTATION

INPUT OUTPUT

Why Hariyali Project? Hariyali Modern campus includes a retail outlet, fueling station, bank, and

demonstration plots. Experience Modern retailing to determine product selection and transparent

pricing. Uniformed sales employees, trained agronomists, interaction with customers

to determine the most best crops to be grown. Training on best production techniques and monitoring production fields for

problems. Benefiting farmers by buying surplus production at harvest time.

Allocation of 150-180 crore to 75 rural retail outlets of Hariyali for development and expansion will help in increasing productivity.

DSCL

• Founded in 1889 under the name Delhi Cloth and General Mills Co. Ltd. (DCM).

• Started as a spinning mill and later diversified into various businesses such as sugar, edible oil, chemicals, fertilizers etc.

• Restructured in 1990 and came to be known as DSCL.

• Ajay Shriram and Vikram Shriram served as Chairman and Vice-Chairman respectively and owned 54.55% of DSCL.

FY2005-06

Sales - $612 million

Profit - $36.7 million

60% of Net Sales – Agricultural Products

40% of Net Sales – Power Intensive Commodities

Hariyali Kisan Bazar

Input

RetailingAgri Advisory Serices

Output

Contract Farming

Direct Linkage to Buyers

Business Model

Facilities at a Store:

Fueling station

Banking facilities

Parking areas

Demonstration areas

Water fountains

Green recreating zones

USP of Hariyali Stores:

V/S

• Clearly labelled price tag• Allowed farmers to touch and feel the product• Choices• Transparent pricing• Within 15-30 km radius

• Over the counter sales• Next to the consumer • Trust factor

Cost to Build a Store:

Radius 15-30 kmHouseholds 15000-20000collective area 60,000-80,000Cost to build 10,00,000 - 15,00,000Cost to build 2,00,00,000 - 3,00,00,000

Yield/acre 14,000Cost/acre 4000Business potential 2,40,00,000 - 3,20,00,000

The Hariyali Kisaan Bazaar Initiative• DSCL was aware of the farmers’ plight.

• They saw value in the relationships and trust that had been cultivated between DSCL and the farmers.

• The seed for Hariyali Kisaan Bazaar was sown when DSCL initiated the ‘Shriram Krishi Vikas Guides’.

• Mr. Ajay Shriram saw this as a profitable long-term business proposition.

• Finally in 2002-03, after a two year planning phase and talking to 200 farmers, the Hariyali Piolt project was launched at 5 locations.

Farmers’ Reaction• Five-day Launch.

• Farmers were skeptical at first.

• They found out that that the farmers are willing to spend more if they feel the product is of good quality.

• By 2007, the farmers were demanding Hariyali to stock greater variety of products such as refrigerators, heating coils, televisions, insurance , banking etc.

• It became a place for social gathering.

• It was more than just providing choice, it provided the much needed ’Respect’ and ‘Dignity’ to the farmers.

Formats

Center

• A model rural hub located near large rural agglomerations or highways

• Focused on all retail and agri businesses

• Format that encompasses Agri-services, One-stop-retail-shop, Sourcing, Banking services, Fuel station and Recreation areas

• Spread over owned 4 acre campus

• Retail space of 15-20K sqft.

Store• Located in the marketplace of

small towns• Focused mainly on retail

businesses • Convenience format

encompassing agri-services and retail of select categories

• Compact space of 4K-5K sq. ft retailing agri-inputs and FMCG

Penetrating markets through appropriate formats

Hariyali - Centers

Hariyali - Stores

HKB is a fully functional organization with senior resources dedicated to category management ,commodity trading, output businesses, financial services etc.

At the lower level each hariyali outlets had about 11 salespeople under an outlet manager.

Category managers decided what products Hariiyali would provide in outlets .They recruited skilled agronomists. They also worked with outside consultants to help plan trainings and sessions with new sales people.

Hariyali also used enterprise wide software system to track pricing ,sales data, vendor information and other statistics empowered by SAP.

The diagram on the left side depicts the organization structure.

HEAD OF RETAIL OPSCATEGORY MANAGER

S

REGIONAL MANAGER

1

TERRITORY MANAGER 1

OU

TLET MA

NAGER

TM 2 – TM

9

RM 2 RM 3

Hariyali’s Alignment With Objectives Of Inclusive Growth

1.  Investment in Rural Infrastructure

Each centre, set up over 2-3 acres of land, provides need-based infrastructure to the farmers.

Facilities include a warehouse for agri-inputs or farm produce, an agri-advisory centre equipped with qualified agronomists, a veterinary centre with qualified vet doctors & availability of medicines.

An information centre with IT linkage to a team of scientists

Availability of  diesel and petrol.

Addition of bank branches & ATMs to these centres will help in achieving the government’s objective of taking credit to the micro level.

2.  Improving farmer’s productivity & profitability

provide 24X7 technology support through a team of dedicated qualified agronomists.

critical last mile delivery of agri advise to the farmers to ensure adoption of appropriate modern agri practices.

focus is on shifting farmers from subsistence  to technology led commercial farming.

3.  Aggregation of Farm Produce

Fragmented land-holdings,  a major constraint in Indian farming.

Create the opportunity to aggregate farm produce & market it to buyers hitherto inaccessible to individual farmers.

4.  Access to information & Use of IT

Use of IT to provide online support on

Latest technical advancements

Weather forecasts

Mandi (market) prices

Fair & transparent billing to farmers

Maintain extensive farmer databases with micro information about the farmers’ field to provide customized service to the farmers.

5.  A Sustainable model for Public-Private partnership

Hariyali initiative aimed at  enhancing the agricultural income of the farmer,

Commercial viability of the business model to ensure sustainability.

Case for collaboration of government efforts with the private sector, as ultimately it would put development on a self-sustaining path.

Other Rural Initiatives

• Like DSCL, ITC had its own agribusiness unit that diversified into retail outlet networks.

• In 2000 ITC launched a web based program for farmers to improve its procurement operations.

• E-choupals.

• Choupal Pradarshan Khets.

• Choupal Sagar.

E-Chaupal Haryali Kisaan Bazaar

Main objective Procurement Rural Retail

Benefit to the farmers computer application to provide market information

provide better method of cultivation by trained agronomist

Synergies Synergies with products

which ITC is manufacturing

Synergies with what DSCL is

selling(inputs to agriculture

plus other services

Economies of scale 25-30 km area coverage 20-25 km area coverage

Procurement centre near small town Strategically placed near petrol pump mainly

Difference Between E-Chaupal And Haryali Kissan Bazaar

Challenges to Expansion

1) Maintaining Profit-Margins while managing both the Input and the Output sides of the business.

Mr. Gupta imagined that Hariyali could be a ‘bulk-buyer’ and serve as conduit to Rural India for companies wanting to sell products/services there.

Now, the challenge was, Mr. Gupta wanted to keep their costs low so that they can offer good prices to the retailers while at the same time they also wanted to pay attractive prices to the farmers for their crops.

Challenges to Expansion

2) Moving from ‘Farmer’ to ‘Rural Consumer’ – The change in Customer Persona

When the Hariyali Management team decided to broaden the offer to include the rural consumers and also meet non-agri needs of farmers, they understood that while moving to a broader market space, they are actually competing with a host of people who are trying to understand the rural consumer.

The incentives, pricing, etc. – they needed to learn it all. They needed to learn about other products and how they sell, which they didn’t know at that moment.

Challenges to Expansion

3) Geographical Expansion – Differing languages, differing Business Practices.

While venturing into new rural-geographies, the challenges faced can be understood by the example:

In northern state of Punjab, 90% agri-purchases were made on credit, with very few cash transactions. As a cash-only establishment, Hariyali was particularly challenged by this. Furthermore, India had at least 16 National languages and 1600 regional dialects.

This makes cross-region communication difficult. This creates additional challenges around meeting consumer’s regional aspirations, buying habits, brand preferences, etc.

Challenges to Expansion

4) Managing Brand-Image:

As the number of outlets increase, it becomes harder to maintain control over staff and customer service levels and thus the image of the outlets.

“Having 10,000 people working for you is one thing, having 10,000 people working in 1,000 different locations is another” quoted Mr. Chhabra.

Thank You