Annapurna Bhandar: Can Future Group Transform Rural Retailing in India?

Abstract

Future Group is one of the largest Indian private conglomerates, serving largely the retail market in the country. Future Retail and Future Lifestyle are the two operating companies of the group. In August 2014, the Future Group signed an agreement with the Government of Rajasthan to launch a Public-Private Scheme called Annapurna Bhandar Yojana. The scheme was aimed towards modernization of public distribution system (PDS), a government-sponsored chain of shops which would distribute basic food and non-food commodities at subsidized prices to poor sections of the society. The Future Group was expected to plug leakages and reduce inefficiency in the operation of PDS, and offer quality goods at competitive prices in the rural markets. The Future Group, in turn, viewed the scheme as an opportunity to understand the rural retail market, where 70% of the country’s population resided. The Future Group set up an ambitious target of establishing 5000 Annapurna Bhandar stores in the rural markets of Rajasthan in 6 months. It demanded an entirely different distribution model than the one used in urban areas and metros. Besides, it was challenging yet critical to get the PDS shop owners, who were not used to the modern retail processes, onboard. Moreover, there was a challenge to change the mindset of customers in the rural markets and encourage them to buy good quality products from Annapurna Bhandar stores, instead of unbranded and often low-quality products from the local grocery stores. Would Future Group overcome the challenges and succeed in retailing its products to the rural customers of Rajasthan?