In Focus

HoReCa industry carving a niche on the retail map

Tanit Chearavanont writes on how the booming food service business in India has augmented business for cash and carry players in the India retail industry over the past years

Tanit Chearavanont

The Indian retail industry has developed significantly, rising as a standout amongst the most venturesome and dynamic parts of the economy. Today, the retail segment represents over 10 per cent of the nation’s (GDP) and a stunning eight per cent of the nation’s employment as indicated by the India Brand Equity Foundation (IBEF). With India positioning as the world’s fifth-biggest destination worldwide in the retail space, the part is probably going to observe more development because of strong household request, in the years to come. Digital technology will play a great role in expansion of this industry.
Fuelling this growth, both FMCG and online retail players are looking beyond traditional trade channels to boost revenues whilst gaining an express entry into the HoReCa (Hotels, Restaurants, and Catering) segment in India. Over the past couple of years, the food service business otherwise called the HoReCa business has turned out to be one of the fastest developing ventures on the planet. Business-to-business (B2B) discount mammoths are progressively assuming control; accounting for nearly 1.3 cr organisations compared to 1.2 cr Kirana stores, the segment is one of the fastest growing in India and provides immense opportunities to cash and carry players. The time is ripe for organised retailers to foray into this market. However, the biggest challenges faced by this segment include transparency in transactions, consistent supplies and value solution in terms of products and services. Also, there is a dire need to rework the retailers’ approach and provide end to end automation, disintermediation of supply chain, transparency and predictability for customers leading to consumer satisfaction. Whilst, the overall
industry faces certain challenges, but it will remain a major engine of growth for the country’s economy contributing significantly to the GDP and generating employment for millions of people. The road ahead for the Indian HoReCa Industry looks promising and it is imperative for the government to facilitate faster growth of this sector.
Leveraging the current opportunities in the sector, following factors will prove to be instrumental in organising the HoReCa industry and will further enable the players to grow their business substantially.

Lifestyle changes are the key growth drivers
Changes in lifestyle patterns being a key driver of development, HoReCa characterises the way of life changes of an advanced buyer. The inclination of having meals outside of our homes has set solid energy for this maturing industry over the business ecosystem in India. This has cleared a way for both solidified nourishment makers, advertisers and cheap food applications who have a solid foothold in the division since their essential wellspring of business originates from HoReCa which offers fundamentally more alluring returns than retail. Abridging this, HoReCa is a broad market with gigantic potential that may even now be tapped to encourage significant monetary advancement in the nation.

Supply chain management acts as a sturdy backbone
Catering to the rising need for an efficient supply chain management system, investment into India’s supply chain infrastructure is experiencing noteworthy progress. The introduction of the Goods and Services Tax (GST), expanding foreign direct investment (FDI) and higher government spending has helped to spur much-needed growth. The supply chain industry has a trickle-down effect on almost all aspects of retail and trade. As India starts to open its economy even further, financing the improvement of this intermediary sector is key to growth in the HoReCa industry.
Whilst a supply chain management approach is ideal when facilitating an effortless transition from farmer to consumer, the concept of supply chain collaboration with logistics service providers has few takers within the HoReCa segment. Nonetheless, a strong supply chain is pivotal for the HoReCa segment. The reason why many brands are largely unsuccessful is the absence of an all-inclusive distribution strategy. Retailers need to intensify their supply chain by making greater investment for ‘last mile delivery’ to win over customer satisfaction, gain loyalty, increased purchase value and frequency, mitigating profitability risk through automation and optimisation of fulfilment locations.
Access to relevant information from each step of the food supply chain magnifies food safety, fortifies the integrity of a brand, and ensures customer loyalty. The lack of transparency and traceability can create an upheaval in the supply chain and expose a brand to unnecessary risk. This drawback in a food supply chain is typically due to companies availing outdated systems or manual tracking and inspections. Being a food quality conscious segment, it calls upon the retailers to maintain high quality standards. At the same time, quality can be difficult to define and isolate but when consumers judge the quality of fresh-food products, they consider much more than taste and appearance. Therefore, maintaining food security has become unconditional and highlights the need to achieve full supervision of food safety in the modern world, because the journey leading from food production to the consumer is very time and space consuming.

A step forward – An omni-channel approach strategy
The solution lies in the ability to combine global capabilities taking into account with local customers via an omni-channel network and efficient supply chain management. An organisation’s capacity to respond to continuous change spread across the market quickly and reduce their costs at the same time is the new mantra of HoReCa worldwide. By managing end-to-end processes with steadfast aptitude and adopting a global view on process ownership, companies can enjoy savings, improve performance, offer quality, choice, and price with unmatched convenience.
An omni-channel strategy can also ideally be leveraged to establish an integrated national footprint for HoReCa in India. This strategy aims to provide a fluid experience to consumers across various channels, factoring in the miscellaneous device’s consumers use for transactions like online stores, mobile app stores, physical stores and so on. Given that brands are adopting innovative methods to interact with consumers, this strategy will help online and retail players rethink their marketing plans and access the best of both worlds when it comes to the HoReCa industry.
Overall, it is important for the players to plan for the long term. Thus, the interplay of these factors will enable the industry at large to sustain the growth momentum in the foreseeable future.

(The author is the managing director and member of the board at Lots Wholesale Solutions)

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