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FoodWorld: Retail Growth and Strategy

FoodWorld is a grocery retailer in India that started in Chennai in 1996 and has since expanded to 41 locations across 4 cities. It aims to provide household groceries at walking distance at economical prices. To attract and retain customers, FoodWorld runs various contests and promotions, keeping 150-200 products discounted at any given time. It also designs store layouts for customer convenience. FoodWorld sources products from various local suppliers and agents. However, expansion brings challenges around identifying optimal locations, economic viability, infrastructure and hiring trained employees.

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Shivangi Rajouriya
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339 views1 page

FoodWorld: Retail Growth and Strategy

FoodWorld is a grocery retailer in India that started in Chennai in 1996 and has since expanded to 41 locations across 4 cities. It aims to provide household groceries at walking distance at economical prices. To attract and retain customers, FoodWorld runs various contests and promotions, keeping 150-200 products discounted at any given time. It also designs store layouts for customer convenience. FoodWorld sources products from various local suppliers and agents. However, expansion brings challenges around identifying optimal locations, economic viability, infrastructure and hiring trained employees.

Uploaded by

Shivangi Rajouriya
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd

CASE STUDY- RETAIL OPERATION MBA RFM Date: 7 August 2020

FoodWorld Household groceries, at walking distance,at economical prices is FoodWorld’s USP.


Where from do you get your vegetables and groceries? Pop this question to any housewife and the
most likely response is from the neighbourhood vendor selling on a pushcart, or a nearby market,
which houses groceries. But both these options make no allowance for hygiene and comfort. This
germ of a thought is what set the process for the conception of FoodWorld in Chennai in 1996. From
there on, FoodWorld, a joint venture between Dairy Farm International and RPG Gardinier, has gone
to add four cities – Bangalore, Pune, Coimbatore, and Hyderabad – at 41 locations.

Raghu Pillai, managing director, FoodWorld says, “We started in Chennai because of the developed
retail market, good real estate prospects and cosmopolitan atmosphere. We have the most
comprehensive range of products at the most competitive prices.” Lower pricing is a function of the
volume that the store generates. It gets close to a million customers a year. The throughput in a
store ranges from ` 20,000 lakh to ` 17 crore a month. It has plans to touch the ` 1000 crore figure by
the year 2003-2004. Says Pillai, “From humble beginnings, today FoodWorld has 12 outlets in
Chennai, 14 in Bangalore, 9 in Hyderabad, 4 in Pune, and 2 in Coimbatore. It occupies a total retail
space of 100,000 sq. ft and has additional 100,000 sq. ft of warehousing facility. Not content to sit on
its laurels, FoodWorld has chalked up plans of setting up 100 stores by December 2000. But instead
of venturing into new cities, FoodWorld will consolidate itself in the already existing locations.

Normally groceries, food, and vegetables is a low interest area. So building a brand is much more
difficult. To generate and retain interest, FoodWorld runs a host of contests and promos. It has a 52-
week promotional calendar with a variety of schemes to attract consumers. Pillai says, “At any given
time, there are 150 – 200 products at a certain level of discount.” The layout of the store is designed
keeping convenience in mind. For example, pulses are kept at the front, rice at the back, while
vegetables to be kept on top. The execution enables vegetables on the top of a basket during a
purchase. FoodWorld sources most of its branded groceries from traditional C&F agents, rice from
the rice mills, fruit and vegetables from the neighbouring villages or the mandi. Some of the
problems encountered are assessing the best location, attaining economic viability and leveraging
synergies. As all volumes are aggregated in the state, generating large enough volumes to leverage it
as an advantage is a difficult task. The infrastructure of cold chains and basic infrastructure is
missing. Getting trained people to man, the stores has proved another challenge. FoodWorld has the
largest number of employees from government and municipal corporation schools. In India, on an
average, there is one retail outlet per thousand people. The industry is poised to grow at 5 – 10 per
cent per year over the next 25 years. But to grow at this rate, retail has to grow across all categories
of the spectrum.

Question: What external factors FoodWorld exploits to ensure successful existence and expansion of
its retailing activities?

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