Rural retail chains buck the trend

With record farm output and high support prices for key crops like wheat and paddy, rural retail chains like Hariyali Kisaan Bazaar and Aadhar Retailing have witnessed a remarkable jump in turnover.

This comes at a time when mainline retail chains are facing a decline in sales, thanks to the liquidity crisis and fears of job loss. Several top retailers have announced plans to cut costs and curtail operations.

On the other hand, because of the robust farm economy, rural retail chains are doing brisk business. The Rs 65,000-crore farm loan waiver has also improved the liquidity situation in rural areas. Most of these retailers say sales volumes are up at least 20-30 per cent. Big ticket items too are vanishing off the shelf.

“Rural India is upbeat and buoyant. The rural economy is in a good shape because of higher minimum support price for crops like wheat and paddy. We are seeing a satisfactory improvement in our sales in October and this has continued in November as well,” said Vikram S Shriram, vice-chairman and managing director of DCM Shriram Consolidated Ltd, which runs the Hariyali Kisaan Bazaar chain of rural retail stores.

“The kharif season has been good and the outlook for rabi season is positive as well. Some impact must have come on account of the massive loan waiver scheme implemented earlier this year,” Shriram added. The company runs 225 retail stores in Uttar Pradesh, Punjab, Haryana, Rajasthan, Madhya Pradesh, Maharashtra and Andhra Pradesh.

These rural retailers operate in states that are leading producers of various agricultural items and have higher productivity. Backed by a favourable weather and handsome market prices, farmers in the country harvested record crops this year.

“Farmers have had a good kharif crop on back of favourable weather. While the support prices for crops like paddy and wheat have gone up significantly, the cost of inputs has not gone up in the same proportion. They have money in their hands and this money is being spent on inputs for the rabi crop as well as on basic utility items,” said Arvind Choudhury, chief executive officer of Aadhar Retailing, a joint venture between Godrej Agrovet and Future Ventures. The venture operates 66 stores in Maharashtra, Gujarat, Haryana and Punjab.

Some of these retailers like ITC and Aadhar also procure farm produce directly from the local farmers at the farm. This translates into a better price since the farmers save on the cost of transporting crops to the ‘mandi’.

“The financial crisis has not percolated to the rural and semi-urban areas, where we operate. The income streams of these areas are well protected against such crisis. In fact, sales at most of our stores touched a new record this October, driven by festive demand,” said Tarun Sawhney, vice-president of Triveni Engineering and Industries, which runs 44 Triveni Khushali Bazaar stores.