Mumbai, Top sales, operations and supply chain stalwarts congregated at the Supply Chain Leadership Councils Rural Penetration & Distribution Summit 10 held on April 23, 2010 in Mumbai to discuss penetration and distribution strategies for rural India. The conference had around 75 delegates, mainly functional heads of FMCG, durables, pharmaceuticals, electronics, telecom, auto and retail companies as well as heads of 3PL operators.

During the meet, it evolved that an average Indian village today well represents an emerging, powerful consumer community. Rising crop prices, sale of land to developers, crop rotations, export orientation and home-coming of the rural youth, government initiatives like NREGA and better wages for farm labour are creating disposable surpluses in the hands of rural and small town Indians.

It surfaced that as urban consumption peaks and market shares get further split, new growth for key sectors mainly FMCG, consumer durables, auto, pharmaceuticals and electronics will come from small town and rural India. According to a recently released ASSOCHAM report, combined rural incomes will total Rs. 13,00,000 Crores in 2011, up from Rs. 800,000 Crores a decade ago. A prosperous village of 10,000 people or 1,500 households today, on an average, has 3000 motor cycles, 20 cars and 32 tractors, seldom idle. Half the households have a TV and a refrigerator, a third use a shampoo and a fourth drink Coca Cola frequently.

However, rural penetration and distribution challenges remain abundant. Some of these include dispersed population further regionalized on economic and socio-economic parameters, seasonal demand, inadequate product display, comparison and reference options, challenging after-sales service models, poor road infrastructure & fragmented transportation service, too many distribution layers, high wastages & breakages, lack of intermodal integration and lack of organised 3PL focus.

During his speech at the conference Mr. Venkatesan- Senior Advisor, National Council for Applied Economic Research commented that often lack of quality data results in lesser than desired clarity on the size of the rural opportunity to marketers. He further added, According to us, the rural urban split in consumer spending stands at 9:11, with rural India accounting for private retail consumption of US $145 to $150 billion.

Anuj Pasrija, Country Head -Arogya Parivar, a rural focused socio-commercial initiative from Novartis India, explained that industry players must work together on opening up the rural markets as once the potential is unlocked, there will be enough for everybody.

Sanjay Kumar, Head (Marketing) - Mirc Electronics (of Onida fame), used the story of IGO, Onidas sister brand meant exclusively for the rural markets, to explain the significance of innovation in product development and distribution strategy to excel in the Indian rural. IGO, in existence for a decade now, is targeting a 52% growth in this financial year over last.

Clifford Patro, Vice President, IBM India spoke of the role that technology can play in bridging the rural-urban divide. He gave the gathering a sneak peek at the Spoken Web, a revolutionary technology designed to go around the low penetration of the Internet in rural India by making the web available to rural Indians via a phone interface.

Other commentators included Shailesh Naik, GM & Head - E Choupal, ITC and Vishal Sehgal, Director - Logistics & Supply Chain, Whirlpool and Rahul Sharma, Head - Centre for Rural Information & Insights, Mahindra & Mahindra. Other important considerations that were discussed included whether GST will increase or decrease the proximity of rural markets from the mainline distribution routes. It also surfaced that the excitement that rural India is causing in Indian manufacturers and marketers represents an opportunity for domestic 3PL players to develop their infrastructure.

Supply Chain Leadership Council™, the organizer of the conference, is dedicated to developing the largest and the most active community of supply chain professionals in India. Supply Chain Leadership Council is focused on delivering forums with bold and well timed themes, dedicated to the Indian logistics and supply chain sector, thereby providing an able platform for meaningful interaction within the industry as well as for consolidating the industrys opinions and concerns towards policymakers.

Rural India may be a fruit hung high but serving our village and small town folks represents a significant opportunity as well as a responsibility for Indian industry, said Gautami Seksaria, Founder & Partner, Supply Chain Leadership Council.

Notes to Editor

Supply Chain Leadership Council™, the organizer of the conference, is dedicated to developing the largest and the most active community of supply chain professionals in India. Supply Chain Leadership Council is focused on delivering forums with bold and well timed themes, dedicated to the Indian logistics and supply chain sector, thereby providing an able platform for meaningful interaction within the industry as well as for consolidating the industrys opinions and concerns towards policymakers.