Future group sharpens focus on food retailing

To create separate arm for fresh produce handling

Kishore Biyani’s Future Group is sharpening its focus on food retailing to tap the growing opportunity in the segment, said a top company executive.

The group is looking at opening different kinds of food retail stores, depending on where it operates, and to acquire more to expand its presence, the executive said.

On Saturday, the Group said it acquired the Indian franchisee store of South Africa’s Shoprite in the Mulund area of Mumbai and renamed it Foodrite. Close to 85 per cent of the stock is food items.

It already has formats such as Food Bazaar, Big Bazaar and KB’s Fair Price, which predominantly stock food items. Food retail is a third of the group’s Rs 9,000-crore revenues.

“The idea is to have different formats for different neighbourhoods. We want to sell merchandise commensurate with the local neighbourhood,” said Rajan Malhotra, president, retail strategy.

The Group operates a little over 1,000 stores, with a total retail space of 16 million sq ft. According to its estimates, Mumbai itself has a total food market of Rs 28,000 crore, with an addition of Rs 8,000 crore per annum, Malhotra said. This is the market among those who earn more than Rs 2 lakh per annum.

Malhotra said since the group had scale, it could hold prices and subsidise these, too.

Future is not alone in increasing the focus on food retailing. Other retail majors such as Tata’s Trent Hypermarkets and Aditya Birla’s More hypermarkets are focusing more on this segment, with kitchens inside stores and a vast assortment of fresh produce. Fresh produce and food stock are believed to be major drivers of footfalls in retail stores.

To improve efficiency in fresh produce retailing, the group is setting up a separate arm which will handle sourcing, grading, assortment and packing of fresh produce, said Malhotra. The group is also planning to manage the entire gamut of fresh produce retailing in its stores, said Damodar Mall, group customer director. Currently, the group manages fresh produce retail on its own in some stores and outsources others to third-party vendors.

“You can see bigger food stores from the group from now on. We are investing a lot in collection centres, distribution centres, food parks and so on. We have APMC (Agricultural Produce Marketing Committee) licences in many states,” he said.

Future Group also recently acquired Capital Foods, a processed foods company. “We are bringing all our FMCG play together as part of an integrated food strategy,” Mall added.