ITC to open smaller Choupal Sagaars2 min read . Updated: 20 Dec 2009, 11:29 PM IST
ITC to open smaller Choupal Sagaars
New Delhi: Kolkata-based conglomerate ITC Ltd plans to launch its rural hypermarkets, known as Choupal Saagars, in a smaller format as it seeks to boost its presence in the countryside, home to two-thirds of India’s 1.1 billion people.
The company already has 24 hypermarkets, each spread across 10,000 sq. ft, offering multiple products and services, ranging from clothing and electronics to soil testing, under one roof. Now, the company plans to set up stores just half the size of the existing ones.
Trimming the store size will enable ITC to penetrate small towns where finding big plots to build rural malls can be difficult, said Rajnish Kumar, category manager, ITC. Indian companies are scaling up their presence in villages and towns as the rural consumer’s purchasing power improves and brand consciousness increases.
“Though we have enough land bank in rural areas and villages, to set up a hypermarket in a 10,000 sq. ft area in the middle of a town is difficult," Kumar said in an interview.
Opening smaller Choupal Saagars will also bring down the company’s operational costs. “Staff, maintenance, depreciation and other operational costs would also go down substantially," Kumar added. He did not specify the number of smaller hubs that are likely to come up though the company has plans to double the number of Choupal Saagars which are currently operational in Madhya Pradesh, Maharashtra and Uttar Pradesh. “We intend to enter other states, too."
Choupal Saagars are part of a rural retailing initiative by ITC, the country’s biggest cigarette-maker, which also has interests in hotels and consumer care products besides agri-business.
The Choupal Saagar, set up to cater to villages or towns with a population of between 100,000 and 500,000, is a hypermarket where farmers can sell their produce and buy almost everything, including grocery, apparel, electronics, appliances, two-wheelers and tractors. The malls also incorporate farmer facilitation centres with services such as sourcing, training, soil testing, health clinics, cafeterias, banking, investment services and a fuel station.
Retail industry experts say that companies have learnt from experience and are looking for relevant retail formats.
“Five-seven years ago, most companies opened large format stores. But these players realized that they need to have cost-effective models. So they started looking at smaller formats and offering products relevant for the rural consumers," said Sanjesh Thakur, associate director, retail and consumer product practice, Ernst and Young India Pvt. Ltd.
Choupal Saagars are part of ITC’s agri-business division, or ABD. Other ABD initiatives include Choupal Fresh, which stocks produce such as fresh fruits and vegetables, and e-Choupals—the Internet kiosks in villages.
According to the company’s website, the agri-business division is the country’s second largest exporter of agri-products with exports of over Rs1,000 crore. Its domestic sales of agri-products are in excess of Rs1,500 crore.