Impact of Organized retailers on Horticultural Producers’ Co-operative Marketing and

Processing Society Ltd (HOPCOMS): A study in Mysore City

Dr. H. M. Chandrashekar*
Abstract
Retail is India’s largest industry, accounting for over 10 per cent of the country’s GDP and around eight
per cent of the employment. Retail industry in India is at the crossroads. It has emerged as one of the
most dynamic and fast paced industries with several players entering the market. But because of the
heavy initial investments required, break even is difficult to achieve and many of these players have not
tasted success so far. However, the future is promising; the market is growing, government policies are
becoming more favorable and emerging technologies are facilitating operations. Retailing in India is
gradually inching its way toward becoming the next boom industry. The whole concept of shopping has
altered in terms of format and consumer buying behavior, ushering in a revolution in shopping in India.
Modern retail has entered India as seen in sprawling shopping centres, multi-storeyed malls and huge
complexes offer shopping, entertainment and food all under one roof. The Indian retailing sector is at an
inflexion point where the growth of organized retailing and growth in the consumption by the Indian
population is going to take a higher growth trajectory. The Indian population is witnessing a significant
change in its demographics. A large young working population with median age of 24 years, nuclear
families in urban areas, along with increasing working-women population and emerging opportunities in
the services sector are going to be the key growth drivers of the organized retail sector in India.

The Horticultural Producers’ Co-operative Marketing and Processing Society Ltd (HOPCOMS)
was established with the principal objective of establishing a proper system for the marketing of fruits
and vegetables; one that benefits both the farming community and the consumers. Prior to the
establishment of HOPCOMS, no proper system existed in Karnataka for the marketing of horticultural
produce. Farmers were in the clutches of the middlemen and the system benefited neither the farmers nor
the consumers. An attempt has been made to analyze Impact of Organized retailers on HOPCOMS in
Mysore City.
Key words: Organized Retailing, HOPCOMS, Marketing of Horticultural Produce, Karnataka
_______________________
* Assistant Professor, Agribusiness Management, Institute of Development Studies, University
of Mysore, Manasagangotri, Mysore, 570 006, Karnataka State, e-mail:
chandruids@yahoo.com
Organized Retail Industry in India

"FDI in retail trade can not only organize a significant part of the largely unorganized domestic
retailing, but also invite established global retail brands into the Indian market, thereby creating
greater outlets for outsourcing and marketing Indian products."

- Recommendations from Economic Survey of India, 2004-05.

Retail is India's largest industry, accounting for over 10 per cent of the country's GDP and
around eight per cent of the employment. Retail industry in India is at the crossroads. It has
emerged as one of the most dynamic and fast paced industries with several players entering the
market. But because of the heavy initial investments required, break even is difficult to achieve
and many of these players have not tasted success so far. However, the future is promising; the
market is growing, government policies are becoming more favorable and emerging technologies
are facilitating operations.

Retailing in India is gradually inching its way toward becoming the next boom industry. The
whole concept of shopping has altered in terms of format and consumer buying behavior,
ushering in a revolution in shopping in India. Modern retail has entered India as seen in
sprawling shopping centres, multi-storeyed malls and huge complexes offer shopping,
entertainment and food all under one roof. The Indian retailing sector is at an inflexion point
where the growth of organized retailing and growth in the consumption by the Indian population
is going to take a higher growth trajectory. The Indian population is witnessing a significant
change in its demographics. A large young working population with median age of 24 years,
nuclear families in urban areas, along with increasing working-women population and emerging
opportunities in the services sector are going to be the key growth drivers of the organized retail
sector in India.

Retail sector in India is targeting the urban as well as rural consumers to post higher revenues
and subsequently uplift the country’s economy
Objectives of the Study

1. To analyze the Impact of Organized retailers on HOPCOMS in Mysore City.

METHODOLOGY

The study is based on Primary data. The primary data has been collected from the producers,
retail outlet of HOPCOMS by administering the questionnaire. The 35 HOPCOMS
farmers/members and 94 HOPCOMS consumers in Mysore city were interviewed to collect the
primary data. The statistical techniques adopted in the study is SPSS Package, Simple tabular
analysis.

Retail sector in India

The retail sector in India has contributed significantly to the country’s economic growth over the
past few years. It is also a leading employment generating sector, which continues to play an
important role in the upliftment of the country’s economic and financial stability. However, it
has been noticed that most retail companies in India are yet to attain the high standards of their
international counterparts. Therefore, majority of the Indian retail companies are yet to make
their presence felt in the global markets.

Retailing is one of the pillars of the economy in India and accounts for 35% of GDP.The retail
industry is divided into organised and unorganised sectors. Over 12 million outlets operate in the
country and only 4% of them being larger than 500 sq ft (46 m2) in size. Organised retailing
refers to trading activities undertaken by licensed retailers, that is, those who are registered for
sales tax, income tax, etc. These include the corporate-backed hypermarkets and retail chains,
and also the privately owned large retail businesses. Unorganised retailing, on the other hand,
refers to the traditional formats of low-cost retailing, for example, the local kirana shops, owner
manned general stores, paan/beedi shops, convenience stores, hand cart and pavement vendors,
etc.
Most Indian shopping takes place in open markets and millions of independent grocery shops
called kirana. Organized retail such supermarkets accounts for just 4% of the market as of 2008.
Regulations prevent most foreign investment in retailing. Moreover, over thirty regulations such
as "signboard licences" and "anti-hoarding measures" may have to be complied before a store
can open doors. There are taxes for moving goods to states, from states, and even within states.

Emerging markets such as India and China are the final frontier for retail taking the focus away
from saturated Western markets. Since 2001, 49 global retailers entered 90 new markets, but at
the same time, 17 retailers left markets in 2005. The Indian retail industry in valued at about
$300 billion and is expected to grow to $427 billion in 2010 and $637 billion in 2015. Only three
percent of Indian retail is organised. Retailers of multiple brands can operate through a franchise
or a cash-and-carry wholesale model.

Retail is India’s largest industry, accounting for over 10 percent of the country’s GDP and
around eight percent of employment. Retail in India is at the crossroads. It has emerged as one of
the most dynamic and fast paced industries with several players entering the market. That said,
the heavy initial investments required make break even hard to achieve and many players have
not tasted success to date. However, the future is promising; the market is growing, government
policies are becoming more favourable and emerging technologies are facilitating operations.

Retailing in India is gradually inching its way to becoming the next boom industry. The whole
concept of shopping has altered in terms of format and consumer buying behavior, ushering in a
revolution in shopping. Modern retail has entered India as seen in sprawling shopping centres,
multi-storeyed malls and huge complexes offer shopping, entertainment and food all under one
roof.

The Indian retailing sector is at an inflexion point where the growth of organised retail and
growth in the consumption by Indians is going to adopt a higher growth trajectory. The Indian
population is witnessing a significant change in its demographics. A large young working
population with median age of 24 years, nuclear families in urban areas, along with increasing
working-women population and emerging opportunities in the services sector are going to be the
key growth drivers of the organised retail sector.
Initially, this was about Indian corporate houses rolling out malls and supermarkets, but with
Wal-Mart coming into the Indian market, the era of the superstore is dawning. Unlike the kirana
stores that served us for decades, this new breed of retail chains is heavily dependent on IT.
Wal-Mart, the world’s largest retailer, and Bharti Enterprises have signed a Memorandum of
Understanding (MoU) to explore business opportunities in the Indian retail industry. This joint
venture will mark the entry of Wal-Mart into the Indian retailing industry.

The biggest competitor for Bharti-Wal-Mart is likely to be Reliance Retail, the retail wing of
Reliance, which had planned to establish 10,000 stores by 2010. It had already opened 11 pilot
stores under the “Reliance Fresh” format in Hyderabad. All these trends and developments
present a great business opportunity for software and hardware vendors from across the globe.
Indian solution providers are targeting this segment have reason to rejoice. For while organised
retail occupies a miniscule two to three percent of the overall Indian retailing industry, that is
poised to change. In spite of the prospects being good things aren’t quite as rosy when it comes
to awareness of IT systems. In most cases, organised retailers in India have installed solutions
that help them automate transactional systems. With the retail sector in India undergoing a
transformation due to the entry of large corporate houses, IT managers and CIOs are now
looking forward to know how IT can help them achieve the business goals of their organisations.

Standards-based architecture and software support all kinds of mission-critical IT applications

for enabling greater efficiency, significant cost savings, and new business value. The critical
activities that can be handled by IT are finance and accounting, business intelligence, vendor
development and management, supply chain management, merchandising and inventory
management, facilities management, stores management, customer relationship management,
branding, marketing, sales promotion and HR.

Like any other vertical, retail also stands to benefit from elaborate IT set-ups. However, this is
subject to the scale and size of the organisation, as well as an objective assessment of its
requirements. Key common challenges that can be tackled through IT implementations include
accurate merchandising, improved planning, increasing profitability, enhancing customer
experience, strengthening store operations, improved workforce management, and improving the
supply chain. This is in fact one of the key imperatives facing retailers in India, to have a robust
and scalable supply chain that will facilitate rapid growth.

Since a basic objective is to make data available to users and customers, proper IT
implementation and superior IT infrastructure ensure that in spite of getting minimal details, the
retailer captures the right information, which flows to everyone from the back office staff to the
head office managers. The entire information flow must be seamless. A retail business works on
a network environment because the stores connect to one another as well as to supplier sites.
This is because in the retail business quick response is the key to success. Proper IT
implementation also ensures that investment in retail reduces substantially.

Horticultural Producers’ Co-operative Marketing and Processing Society Ltd

The Horticultural Producers’ Co-operative Marketing and Processing Society Ltd. or

HOPCOMS was established with the principal objective of establishing a proper system for the
marketing of fruits and vegetables; one that benefits both the farming community and the
consumers. Prior to the establishment of HOPCOMS, no proper system existed in Karnataka for
the marketing of horticultural produce. Farmers were in the clutches of the middlemen and the
system benefited neither the farmers nor the consumers.

The history of the establishment of HOPCOMS has an interesting background. First, the
Bangalore Grape Growers’ Marketing and Processing Co-operative Society was established in
1959, under the guidance of Dr. M.H. Mari Gowda, the then Director of the Department of
Horticulture. The main objective of the society was to encourage grapevine cultivation by
providing necessary inputs, technical know-how and marketing facilities to grape farmers. It had
jurisdiction over Bangalore, Kolar, Mysore, Tumkur, Mandya and Mangalore districts. Since
grape was a seasonal fruit, the society started handling all fruits and vegetables from 1965. Due
to this change in operations, the name of the society was changed into Horticultural Producers
Co-operative Marketing and Processing Society Ltd.

Area of Operation
The operation of the society covers three districts - Bangalore Urban, Bangalore Rural, Mysore
and Kolar.
Objective of HOPCOMS are 1.To ensure remunerative price to producers of horticultural crops,
2. To free from both producers and consumers from the clutches of middlemen, 3. To endure
quality supply of fruits and vegetables at reasonable price to consumers, 4. To expand marketing
and cold storage facilities progressively for the benefit of the farmers, and 5. To promote
development of horticulture on scientific lines by providing necessary inputs and technical
advice

Presently, HOPCOMS handles around 100 metric tonnes of fruits and vegetables every day. The
member farmers bring their produce to the Society, where the produce is graded, weighed and
the payment is made to the farmers immediately. To help the growers for transporting the
produce, the Society has procurement centres in major supply areas namely Sarjapura,
Channapatna, Hosakote and Kanakapura.

The procured fruits and vegetables are supplied to consumers through the Society’s retail outlets
in Bangalore, Kolar and Tumkur. Presently, HOPCOMS has 290 retail outlets (Bagnalore Urban
and Rural-290, Kolar-30) which provide fresh fruits and vegetables to the consumers

The Society has also taken the lead in supplying quality vegetables and fruits to all the
Government Hospitals, Hostels, Major Factories, Clubs etc. It also undertakes bulk supplies to
marriages and other social functions

Processing
HOPCOMS also prepares and sells fresh juices such as Blue Grape, Mango, Orange etc. and
selling the same to the general public at Rs. 6-00 per bottle.
Supply of inputs to growers

HOPCOMS supplies inputs such as manures and fertilizers, plant protection chemicals,
Gibberelic Acid, Secateurs etc. to the growers at reasonable rates.
Impact of Organized retailers on HOPCOMS – An analysis

Table 1: Establishment of Hi - tech HOPCOMS outlets in Mysore City.

Hi-Tech HOPCOMS No. of Respondents Per cent

Strongly Disagree 1 3
Disagree 1 3
Neither Agree nor Disagree 4 11
Agree 9 26
Strongly Agree 20 57
Total 35 100
Source : Primary Survey – 2010.

The Table 1 reveals the opinion of HOPCOMS farmer members towards starting of new High-
tech HOPCOMS the 57 percent of them strongly agreed and followed by 26 percent are agreed
to start new modernized HOPCOMS outlets, where as 11 percent them neither agree or disagree.
The remaining 3 percent of them strongly disagreed, to establishment of Hi-tech HOPCOMS in
Mysore City. The most of the organized retail outlets are coming up with a new strategy with
modernized outlets. This is because increase the business turnover.

Figure 1: Establishment of Hitech HOPCOMS outlets in Mysore City.

Table 2: Impact of Organized retailers on HOPCOMS in Mysore City.

Impact of Organized retailers on HOPCOMS No. of Respondents Per cent

Strongly Disagree 16 46
Disagree 5 14
Neither Agree nor Disagree 11 31
Agree 2 6
Strongly Agree 1 3
Total 35 100
Source : Primary Survey – 2010.

The Table 2 reveals the Impact of Organized retailers on HOPCOMS Among them 46 percent
where strongly disagreed, 14 percent were disagree, 31 percent were are neither agreed nor
disagree. The 6 percent of respondents agreed and 3 percent of the respondents strongly agreed
and opined that there is an impact of organized retail outlets on HOPCOMS retail outlet in
Mysore City. The impact would by gradually affect on HOPCOMS unless the modernization of
outlets and provide betters service to producers as well to consumers.

Figure 2: Impact of Organized retailers on HOPCOMS

Table 3: Rating of HOCPOMS by farmers.

Rating of HOCPOMS No. of Respondents Per cent

Very Good 9 26
Good 25 71
Poor 1 3
Total 35 100
Source : Primary Survey – 2010.

The Table 3 reveals the Rating of HOCPOMS by farmers. Among them 71 percent opined as
good followed by 26 percent of them as very good and remaining 3 percent as poor the majority
of respondents rated HOPCOMS provide good services to farmers as good. It is clear from the
study that they would provide better service in future by updating and modernizing their retail
out let to producers as well as to consumers.

Figure 3 : Rating of HOCPOMS by farmers.

Table 4: Opening of Large sized HOPCOMS/ Modernised Hopcoms retail out lets.

Favour of opening Large sized HOPCOMS No. of Respondents Per cent

Quality 33 35
Service 28 30
Increasing consumption and life style 9 10
Necessary for food 12 13
All fruits and vegetables are available 4 4
less price when compared to organized retail outlet 8 8
Total 94 100
Source : Primary Survey – 2010.
The Table 4 reveals the consumers are Favour of opening Large sized HOPCOMS/modernized
retail outlets. 35 percent are favour for quality, 30 percent are favour for service, and 10 percent
are favour for increasing consumption and life style. 13 percent are favour of necessary for food,
4 percent are favour for all fruits and vegetables, 8 percent are favour toward fewer prices when
compared to organized retail outlets.

Figure 4: Opening of Large sized HOPCOMS/ Modernised Hopcoms retail out lets

Major findings of the study

1. The Impact of Organized retailers on HOPCOMS, Among farmers the 46 per cent were
strongly disagree, 14 percent were disagree, 31 percent were neither agree nor disagree.
The 6% of respondents agreed and 3% of the respondents strongly agreed and opined that
there is an impact of organized retail outlets in Mysore City.
2. The 71 percent of farmers opined has good followed by 26% of them as very good and
remaining 3% as poor, the majority of respondents rated HOPCOMS working and
service provided to farmers as good.
3. The consumers are Favour of opening Large sized HOPCOMS/modernized retail outlets.
4. The majority of the consumers are having good opinion towards HOPCOMS products,
service, display, quality of the products they handled both fresh as well as processed
products in HOPCOMS in Mysore city.
5. The Shop Keepers are in making changes/MODERINIZAION of HOPCOMS retail
outlets in the Mysore city. The 72 percent of the shopkeepers strongly agree. The most
 important strategy to attract the consumer is to fulfill the needs of consumers. The most
of the consumer attracted towards new building the designs, product, display, discount
price, Quality. Etc., in this connection 72% of the shopkeepers strongly agreed to
modernized the existing HOPCOMS retail outlet in Mysore City.

Conclusion

The enormous losses of fruits and vegetables produced in the state are mainly because of
the lack of proper infrastructure for storage and transportation under controlled conditions. Of
late, Supply Chain Management (SCM) is gaining importance due to globalization. A supply
chain is a set of three or more organizations linked directly by one or more of the upstream or
downstream flows of products, services, finances, and information from a source to a customer.
Supply chain management, then, endorses a supply chain orientation, and involves proactively
managing the two-way movement and co-ordination of goods, services, information and funds
(i.e. the various flows) from raw material through to end user. The changing lifestyle and open
economy have forced the manufacturers/suppliers to produce/supply quality products. Several
factors are driving an emphasis on supply chain management. First, the cost and availability of
information resources between entities in the supply chain allow easy linkages that eliminate
time delays in the network. Second, the level of competition in both domestic and international
markets requires organizations to be fast, agile, and flexible. Third, customer expectations and
requirements are becoming much more stringent. So to satisfy the consumers, Supply Chain
Management system should operate with the two main objectives Timeliness and quality. The
proper backward and forward linkages should be provided to the farmer members of HOPCOMS
in Mysore city. In Mysore city the HOPCOMS Retail Outlets are not upgrading in terms of
infrastructure such as storage, display, technology etc. There is a need to upgrade the
technology, Infrastructure facilities as similar to organized retail outlets.
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