News: Pantaloon, Reliance set to foray into wholesale trade
(TNN 12/04/2006) Mumbai - Pantaloon Retail and Reliance are chalking out a massive foray into the wholesale agri-commodities business trade in India, with a business-to-business (B2B) model similar to that of Wal-Mart’s Sam’s Club across smaller towns and cities. The move is part of a strategy to strengthen their back-end supply-chain and sourcing capabilities to reduce costs and sharply scale up business volumes. The wholesale business will be a separate business model akin to that of Metro’s Cash N Carry, which sells primarily to the large distributors, kiranas and other mom & pop stores. Pantaloon’s wholesale retail venture, currently called KB’s Wholesale, has already set up shop in smaller markets like Mathura.
Modern retail formats are trying to build up efficiencies in the sourcing system to cut costs drastically by eliminating the distributor in the system. Analysts said the savings will help to lift profit margins for retailers. It is learnt that Reliance has already tied up with farmers and has even bought out several wholesale suppliers for its retail venture. Currently, most of the kiranas source their regular requirements from the APC or the large distributors who claim a margin of 5-6%. Industry sources said the wholesale distribution market is set for a big change with the entry of the big retailers.
Both the retailers have tied up with farmers in a big way to source commodities like dals and pulses and other food grains, apart from fresh vegetables, fruits and processed foods directly from the growers and suppliers, sources said. When contacted, Kishore Biyani, MD of Pantaloon Retail, said he did not want to divulge details. “It is a massive B2B model that will target retailers,” he said.
Retailers are scaling up volumes to ensure manufacturers sell to them. “For instance, abroad, if manufacturers do not sell to Wal-Mart, they are in deep trouble. That is what the industry calls the big-volume effect,” said an industry official. There are several indications that Wal-Mart is considering a JV-wholesale model in India, first with Sam’s Clubs that caters only to a business clientele. Already, the Rs 40,000-crore organised retail industry is providing large volumes to FMCG manufacturers. Industry majors like HLL, P&G, Colgate, Marico and Cadbury have stepped up discounts to retailers.
Modern retail formats are trying to build up efficiencies in the sourcing system to cut costs drastically by eliminating the distributor in the system. Analysts said the savings will help to lift profit margins for retailers. It is learnt that Reliance has already tied up with farmers and has even bought out several wholesale suppliers for its retail venture. Currently, most of the kiranas source their regular requirements from the APC or the large distributors who claim a margin of 5-6%. Industry sources said the wholesale distribution market is set for a big change with the entry of the big retailers.
Both the retailers have tied up with farmers in a big way to source commodities like dals and pulses and other food grains, apart from fresh vegetables, fruits and processed foods directly from the growers and suppliers, sources said. When contacted, Kishore Biyani, MD of Pantaloon Retail, said he did not want to divulge details. “It is a massive B2B model that will target retailers,” he said.
Retailers are scaling up volumes to ensure manufacturers sell to them. “For instance, abroad, if manufacturers do not sell to Wal-Mart, they are in deep trouble. That is what the industry calls the big-volume effect,” said an industry official. There are several indications that Wal-Mart is considering a JV-wholesale model in India, first with Sam’s Clubs that caters only to a business clientele. Already, the Rs 40,000-crore organised retail industry is providing large volumes to FMCG manufacturers. Industry majors like HLL, P&G, Colgate, Marico and Cadbury have stepped up discounts to retailers.
posted by InCar Group Press Room at 14:31
0 Comments:
Post a Comment
<< Home