Rural Malls: Chaupal Sagar
Chaupal Sagar is one of the first organised retail forays into the hinterland. It was soft-launched on 15 August. It is actually a warehouse for storing the farm produce that ITC buys through its e-chaupals. The mall has come up in one part of this warehouse.It has been set up by the international business division of tobacco major ITC. It has been initiated as rural shopping-cum-information centres in Madhya Pradesh. The first rural mall has come up 40-odd kilometres journey from Bhopal towards Sehore.

ITC Spent 3 years and Rs.80 crores on research and development of this concept including investments in E-choupal.
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Features of Indian Rural Markets

*Large and Scattered market:
The rural market of India is large and scattered in the sense that it consists of over 63 crore consumers from 5,70,000 villages spread throughout the country.
*Major income from agriculture:
Nearly 60 % of the rural income is from agriculture. Hence rural prosperity is tied with agricultural prosperity. read more »

Availability of food grains is not a sufficient condition to ensure food security to the poor. In addition to availability of food grains it is also necessary that the poor have sufficient means to purchase food. The capacity of the poor to purchase food can be ensured in two ways.

• Raise the level of incomes of the poor or
• Supply food grains to the poor at subsidized prices.

Employment generation programs for the poor try to ensure that the poor have sufficient purchasing power. The Public Distribution System (PDS) tries to supply food grains to the poor at subsidized prices.

There are around 4.62 lakh Fair Price Shops (FPS) distributing annually commodities worth more than Rs 30,000 crore, to about 16 crore families, the PDS in India is perhaps the largest distribution network of its type in the world. The level of food subsidies in India as a proportion of total government expenditure has gone up from a level of about 2.5 percent or below during the beginning of the 1990s to more than 5 percent today.

Central government is responsible for procurement of good and its duty of corresponding state government to ensure the fair distribution.

All is not well with the Public Distribution System in India. There have been numerous scams in which food for the poor have gone into the market, poor people starving to death. Despite efforts by the government efficiency of the PDS is questionable.

Reason for the failure of PDS as a retail mechanism:

• Lacks of awareness among the poor, the poor were not aware of the quantity and price to pay for the goods this fact helped officers to take undue advantage of the situation and sell the goods in the market.

• Corrupt officers

• Mechanism of distribution not foolproof there were many loopholes like it is well known that Fair Price Shop owners declare on paper that they have sold a certain quantity of food to the poor at subsidized prices but actually make a big profit by selling the food at market prices.

• Inefficiency in the government machinery and thought process, they didn’t come up with innovative ideas and they opposed any changes in the current system.

• Decision of the government to go on its own not taking private players along.

• Coming up with a single model for pan India ,India as we all know is so diverse that one model cannot cater to all state and all places there should be flexibility in the structure of PDS

• Opening store in remote areas incurs huge expenses on the part of government so it should have taken the services of the local store to cut down costs.

• There are large number of fake ration cards adding to the burden of the government

• Lack of proper channel of information flow, the correct information rarely reached the top bureaucracy

Despite good intention on the part of government PDS failed in India because they were fundamentally wrong they seemed like they were implemented in hurry (considering the loopholes) without proper market research. In this case it seems that government lacked vision and future insights. Again as every other government machinery it suffered with corruption.

An Overview

The Indian rural market with its vast size and demand base offers great opportunities to marketers. Two-thirds of countries consumers live in rural areas and almost half of the national income is generated here. It is only natural that rural markets form an important part of the total market of India. Our nation is classified in around 450 districts, and approximately 630000 villages, which can be sorted in different parameters such as literacy levels, accessibility, income levels, penetration, distances from nearest towns, etc.

Few Facts

70 % of India’s population lives in 627000 villages in rural areas. According to the NCAER study, there are almost twice as many ‘lower middle income’ households in rural areas as in the urban areas.

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At the highest income level there are 2.3 million urban households as against 1.6 million households in rural areas.
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Middle and high-income households in rural India is expected to grow from 80 million to 111 million by 2007.
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In urban India, the same is expected to grow from 46 million to 59 million. Thus, the absolute size of rural India is expected to be double that of urban India.
Opportunity
The above figures are a clear indication that the rural markets offer the great potential to help the India Inc which has reached the plateau of their business curve in urban India to bank upon the volume-driven growth.

The Indian rural market with its vast size and demand base offers a huge opportunity that MNCs cannot afford to ignore. With 128 million households, the rural population is nearly three times the urban.

As a result of the growing affluence, fuelled by good monsoons and the increase in agricultural output to 200 million tonnes from 176 million tonnes in 1991, rural India has a large consuming class with 41 per cent of India’s middle-class and 58 per cent of the total disposable income.

The importance of the rural market for some FMCG and durable marketers is underlined by the fact that the rural market accounts for close to 70 per cent of toilet-soap users and 38 per cent of all two-wheeler purchased.

The rural market accounts for half the total market for TV sets, fans, pressure cookers, bicycles, washing soap, blades, tea, salt and toothpowder, What is more, the rural market for FMCG products is growing much faster than the urban counterpart.