A Fistful of Rice By Vikram Akula

In 'A Fistful of Rice' Vikram Akula traces out his journey of starting SKS and shares his philosophy, take on tackling the poverty and rural issues in the country. The strength of the book is it very well-written and easy to read (infact at times a little too easy) and gives us an understanding of the for-profit micro finance model as against the NGO model which Grameen Bank promotes.

The book starts with his experiences on his visits to India in his childhood and moves on to the days where he started working in rural India and to the part where his search for a scalable model helps him conceptualize the SKS model. The idea he promotes through the book is that it is not a bad thing to make profits from micro finance or the poor. His idea is that one will not able to attract more money (other than grants and government funds) unless and until you are able to provide decent returns. This is what Late Prof C K Prahalad propounded in his book bottom of the pyramid where he said that there is money to be made by serving the world's poor.

Towards the end of the book, Akula shares the new areas in which SKS is expanding , from using their reach in rural India to sell product to their members, the non-profit work which they are doing in areas of education & health....

The book was written before the Microfinance crisis hit, so there is no mention about that, and the negative coverage which the industry has got, but then these issues are out the scope of this post, but there are a lots of positives which one can take away after reading the book especially for people interesting in making their presence felt in rural India.

Retail Consolidation : Observations from the Indian Market

In one of my earlier study on understanding retailing in villages, I had observed how retailers in the smaller villages had more generic offerings (even homogeneous) but as the population of the villages increased more specialized retailer would come up. I could not empirically test it but then there is some support in the theory and logically also it makes sense because a specialized retailer would survive only a certain minimum scale.

Now on my recent trips to the markets in some of the Meteors gave me a different flavor of how things are evolving, at one end we have the emergence of these more specialized retailer, like Mobile stores (driven by the mobile revolution), baby care stores like Baby center catering exclusively to needs to babies and pregnant mothers ... and at the other end of the evolution the smaller specialized stores like the chemists and consumer durable shops are becoming more more generic in their offerings. I still remember a couple of years back when I was looking for a camera roll (yes people still buy it!!) I could get it in a near by chemist store who was literally stocking everything which a typical grocer would do, and chances of you getting a specialized medicine was also low.

Some of these changes can be attributed to the emergence of organized retail and consumer willingness to travel some distance to buy products at these larger format stores. The smaller shops are reacting by adding more categories to gain economies, but a lot these need to studied in order to document this evolution and how it will impact the retail structure in the country….

Packaging Quality & Size

The rising inflation is making FMCG marketers rework their packaging strategy. The sachet revolution has become a folklore in the marketing world, on how it pushed consumption into newer and newer markets. But the current need to revisit their packaging decision is not driven by the need to increase penetration, but from the need to control price increase. Though some of the companies are still working on reducing the weight & keeping the price constant, I am not sure about its efficacy, when the reduction is 5-10 gms , as in the case of biscuits & confectionery maybe the consumer will not notice but when the weight goes down from 500gms to 325gms it sure to be noticed ...

The second aspect is related to coming up with cheaper packing options, so that it helps them save money. This again seems to be a very risky strategy where in many categories the packing also protects the basic product itself , especially in the context of the mom-n-pop stores in Indian retail. They say that when Marico first introduced plastic containers for parachute they had to do a lot of convincing before the retailer agreed , because till that point plastic quality used to be so bad that rats could actually eat into the containers!!!

And overall the packing quality has never been comparable to the developed world , either in terms of quality or in terms of details on the packs. Are we moving in the right direction?

Growth - But Sustainable ??

Every company wants to grow, and post liberalization we have seen companies grow at rates which were unheard of earlier. Airtel, LG, Nokia, Hyndai are examples of this fast growth..

The news is that HUL has set a target of 50,000 crores by 2015, link to the story. To put the target in perspective, it took the company 75 years to touch 20,000 crores and now wants to reach 50k. According to the news paper article these kind of target are called BHAGs, or Big Hairy Audacious Goals, in multinational parlance. Those which provide a sense of larger purpose and propels the organization to move at a faster pace.

My take on the audacious goals is that , though it might help push the company beyond the typical growth targets of 10-12% and be happy,, to look beyond and stretch their resources to meet these targets, it will also create a lot of pressure in the system ( distribution channels and sales personnel) which needs to be handled well. Even if an inorganic way of growth will not be an easy one.

But yes from an outside observer it will be interesting to see how things evolve ....