Food Retail Losses: Rs 13,000 Crore in 7 Years

After studying law I vectored towards journalism by accident and it's the only job I've done since. It's a job that has taken me on a private jet to Jaisalmer - where I wrote India's first feature on fractional ownership of business jets - to the badlands of west UP where India's sugar economy is inextricably now tied to politics. I'm a big fan of new business models and crafty entrepreneurs. Fortunately for me, there are plenty of those in Asia at the moment.

The only thing tougher than making money as a retailer these days is making money as a food retailer. According to a research by Crisil, food retailers in India have lost Rs 13,000 crore since 2008. Crisil says no other vertical, such as apparel, consumer durables or footwear, has witnessed similar losses.

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Why is this significant? For one, at 69 percent, food contributes the lion’s share of retail revenue, and for retailers who aim to be in the top five it is difficult to get there without having a meaningful presence in the sector. Retailers realise this and have undertaken a series of measures, from right-sizing stores to exiting some product categories and increasing the share of private labels. The efforts, clearly, have not borne fruit.

Is there any chance of the losses slowing down? Not until 2018, says Crisil.

(This story appears in the 27 June, 2014 issue of Forbes India. You can buy our tablet version from Magzter.com. To visit our Archives, click here.)

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