To get a fix on what the customer wants, the Aditya Birla Group plans to approach cooperative and industry boards specializing in products such as milk, tea and fruit and vegetables for expert advice in its retail business.
“We are planning to collaborate with these boards since each cooperative could bring valuable customer research, expertise and insights in their specific field. It could be in terms of tastes and preference of customers or even in procurement of goods,” said a senior official of Aditya Birla Retail who did not wish to be identified.
“At present, all the major retailers treat these boards only as vendors and a symbiotic partnership is resorted to only on an ad hoc basis,” the official added.
Pratichee Kapoor, senior consultant at business consulting firm Technopak, said, “These boards understand the pulse of the market and also the consumers. They will be able to guide retailers as to what and in which areas products will sell the fastest since they understand the nuances.”
Industry experts say the concept of involving trade boards would also allow Aditya Birla Retail, which is still learning the ropes of the business, to integrate backward to the source of produce.
“Tying up with various boards could bring valuable inputs from the experts of each board and specific benefits in sourcing by bringing best practices. These boards canenable the retailers to locate the right source of purchase and hence will lead to right pricing. Also, if retailers partner boards directly, they can knock off many intermediaries in the distribution chain,” said chief executive of the Retailers Association of India Gibson Vedamani.
The key focus of the Birla retail foray is believed to be the food and grocery segment. The group is targeting about 50% of its revenues from this segment with lifestyle segment accounting for 22% and other segments accounting for the remaining 28% of revenues, says a report by Mumbai-based brokerage Edelweiss Capital.
That’s why tie ups with cooperatives such as the Gujarat Cooperative Milk Marketing Federation (GCMMF) are critical. GCMMF, which markets the Amul range of products, collected 2.28 billion litres of milk from 2.5 million members last year.
GCMMF chief general manager R.S. Sodhi said, “we are already supplying dairy products to Aditya Birla group’s supermarket chain Trinethra. If they approach us for other services, we would love to share information about customer habits and customer research on dairy products.”
According to a report by Edelweiss, the Aditya Birla Group is expected to invest about $3.5 billion (Rs15,050 crore) over the next three to four years to open more than 6,000 retail outlets.