Once a small wholesaler to the legions
of pushcart vendors in Mumbai, Shivaji
Dhembre is today part of the modern
retail phenomenon that is sweeping
across India. Dhembre manages sections
that sell fresh produce in 10
supermarkets and hypermarkets of
Pantaloon Retail (India) Ltd—India’s
largest listed retailer has outsourced
this function to him.
Similarly, tea trader Ketan Desai sells more than a dozen variants of
loose tea through sales counters in 22
of Pantaloon’s Big Bazaar hypermarkets
and Food Bazaar supermarkets in Kolkata
and other eastern cities.
As organized retail starts to establish
itself in India, and several
deep-pocketed modern retailers look to
get rid of the layers of intermediaries
in the country’s supply chain, many of
them are outsourcing parts of their
operations to these middlemen. The
retailers hope to gain from the
expertise of the intermediaries. And
middlemen are only too happy to do this
because it gives them a part to play in
the organized retail business.
“The logic is clear that if you want to
grow fast, then partnering with small
players (firms) that are driven by
entrepreneurs is a good way,” says Rajan
Malhotra, chief executive of Big Bazaar.
“Some of the businesses are best left to
the small players…as an organization we
will take a longer time in developing
expertise (in these areas).”
Fresh approach: From being a
wholesaler, Shivaji Dhembre
(front) has moved to managing
fresh produce sections at Big
Bazaar outlets. (Kedar Bhat /
Mint)
Malhotra says the hypermarket chain
outsources the management of the
florist, optical store, photoshop,
fashion-jewellery counter, among others,
at its stores to companies and
entrepreneurs through a revenue-sharing
model.
Based on this model, Desai and his team
of more than two dozen people manage the
loose tea business in Big Bazaar outlets
in eastern cities and pay some
“commissions” on the total sales revenue
to Pantaloon.
“Tea is a complex category,” says Desai.
“You have to manage the quality, need
tea-tasters and it’s a small category
for Pantaloon to justify a team.”
Desai says he is also in talks with Aditya Birla Retail Ltd to manage
the tea counter in the company’s
upcoming hypermarket in Vadodara. A
senior manger for Aditya Birla confirmed
that the company is in a dialogue with
Desai for a similar arrangement.
Generally, organized retailers blame the involvement of the middlemen,
such as Dhembre, in the supply chain for
increasing the prices of goods without
adding much value to them. That’s the
way intermediaries have been operating
in India for centuries—making money
between farmers and manufacturers on the
one side and the small retailers on the
other.
