Mr.

Team: MArK-3

:: Topic ::

Organized retailing serving the bottom of the pyramid

Symbiosis Center for Management and Human Resource Development

Team: Phone E-Mail

Archit Sureka +919860929309 architsureka@gmail.com

Sinjani Mondal +919860928892 sinjani_m@yahoo.co.in

1. Executive Summary

"Low-income markets present a prodigious opportunity for the world's wealthiest

Companies Ð'- to seek their fortunes and bring prosperity to the aspiring poor."

--C.K. Prahalad and Stuart L. Hart,

The Fortune at the Bottom of the Pyramid

India's seventy-percent population lives in rural areas, which translates into a potential

consumer base of about 700 million individuals (more than the population of United

States and EU combined).

Time and again studies have shown that the rural consumer is no different from urban

consumers in terms of aspirations for a better lifestyle. However he is constrained by

intermittent & uncertain cash flows, poor infrastructure, lack of availability of quality

products and services and high dependence on feeder towns & cities.

The paper deals with understanding the dynamics of growth in the Indian market and has

tried to evaluate the highly attractive rural market in India -the Bottom of Pyramid (BOP)

- on various parameters in terms of present scenario, characteristics, challenges and future

growth potential.

Through the paper we have tried to study the feasibility of setting up a Ð''Sampoorna

Grameen Bazaar' (SGB) across the State of Madhya Pradesh to cater to the needs of the

population residing in rural and backward areas outside the retail and distribution

network of manufacturing companies. We begin the paper by giving a brief project

rationale. We then go on to do a problem-opportunity analysis taking various factors into

consideration. Subsequently, we conclude the paper by looking at the future prospects of

such projects across the country.

Table of Contents

1. Executive Summary 2

2. Introduction 4

2.1 Statistics about the Bottom of Pyramid (India) 5

2.2 Retail Formats 5

3. Some Live Examples of Organized Rural Retailing in India 6

4. Problems in Rural Retailing 7

5. Opportunities in Rural Retailing 7

6. Changes in the Indian Rural scenario: 8

6.1 Rural Consumer Insights 8

7. THE CASE STUDY: Sampoorna Grameen Bazaar (SGB) 9

7.1 Situational Analysis 9

7.2 Objectives 9

7.3 Approach 9

7.4 Proposed Facilities 10

7.5 The Opportunity 10

7.6 Challenges 11

7.7 Why Madhya Pradesh? 12

7.8 Government Support 12

7.9 Benefits to Farmers 12

8. Conclusion 15

9. References 16

2. Introduction

The Indian rural market today accounts for only about Rs 8 billion (53 per cent - FMCG

sector, 59 per cent durables sale, 100 per cent agricultural products) of the total ad pie of

Rs 120 billion, thus claiming 6.6 per cent of the total share.

Rural India is like a pyramid. The top of the pyramid is occupied by the rich farmers and

businessmen. They constitute around 5 per cent of the population. The next level belongs

to those with a regular income and the base of the pyramid is occupied by the vast

majority of the people who are daily wage laborers.

Organized retail in India which stands at around 3% of the total retail is showing signs of

bigger and better growth of around 30% CAGR.

Source: CEIC, CSO, AC Nielsen, Morgan Stanley Research (FY 2010 and FY 2015 are estimated figures)

(PFCE - Private Final Consumption Expenditure)

2.1 Statistics about the Bottom of Pyramid (India)

Population: 756 million

Number of Households: 151.2 Million

Annual Income: Upto Rs. 90,000

Estimated annual size of the rural market -

FMCG

Rs. 65,000 Crore

Durables

Rs. 5,000 Crore

Agri-Inputs (including tractors)

Rs. 45,000 Crore

2 / 4 Wheelers

Rs. 8,000 Crore

(Source: The marketing