The first FoodWorld store was set up in R.

A Puram in Chennai on 9th May 1996

By November 1998, the total number of FoodWorld retail outlets reached 19,spread
over three large cities of South India,viz ,Chennai(6),Bangalore (8) &Hyderabad (5)
The turnover during the first year (1996-97) was Rs.210 million and this was doubled
to Rs. 520 million by November 1998.
FoodWorld was a division of Spencers ,the retailing company under RPG Enterprises
RPG was one of the top 5 business houses in India ,with a sales turnover of Rs. 65
Billion in 96-97 & an asset base of Rs. 75 billion as of 1997
RPGs business interests spanned several sectors including power, automobile tyre,
agri-business, telecommunications,retailing,&financial services
RPGs entry into retailing was through the acquisition of Spencer & Company in
1989
In I989,RPG purchased Spencers & established it as a separate division under the
leadership of P.K. Mohapatra,a senior RPG executive
At the time of acquisition ,Spencers had nine retail chain in India at that time
One of the options at the time of acquisition was to focus on the development of the
real estate owned by Spencers.
However,the RPG executives who were managing Spencers felt that the potential of
retail business should not be given up easily.Therefore,it was decided to experiment
with one store to test the potential.If the experiment failed,then RPG would close
down the retail operations.
In line with this decision,the departmental store in Bangalore was modernized in
1991,retaining its product profile of hardware,food,kitchen appliances,& clothing.
When the store opened ,sales increased to four times the previous levels & made a
healthy contribution.This settled the issue in favour of continuing the more important
activities of Spencers ,which included retailing,airline general sales agency,&
pharmaceutical retailing.
The total turnover of Spencers increased from Rs. 250 million at the time of
acquisition to nearly Rs.1000 million by 1994 through a careful process of nurturing
the 3 activities while eliminating over 20 other less vital activities.
Based on the decision to focus on the retail sector, senior executives studied
various retail formats & retailers world over & discussed issues with experts in the
field.
These insights provided 3 directions: First ,that the company should not get into
niche retailing;instead,they should focus on the mass market. Second ,that
organized retailing format was closely related to economic development of
countries.Third,that they should focus on daily necessities of households-food,
clothing,& health.
Clothing was eliminated ,since the company had no prior experience in the fashion
industry or in textile manufacturing.
Therefore, food was decided as the entry product line followed by health care.
It was decided to follow a supermarket format for the retailing business.
As per the 1991 population census, the total population of
India was 846 million. About one fourth of this population lived
in 3768 towns & the remaining in 627,000 villages
The retailing system in India operated at 3 parallel levels: the
formal sector, informal sector& the fair price shops under the
governments public distribution system
The total number of retail outlets under the formal system in the country in 1993
was estimated to be about 8.06 million &,in 1998,it was about 11.1 million. It was
estimated that by the year 2001,the total number of retail outlets in the country
would be about 13.6 million. Approximately 30% of these outlets were located in
urban areas
Number of Outlets (in 000)
Area 1993 1996 1997 1998 1999 2000 2001
Urban 2693 3074 3200 3400 3500 3700 3800
Rural 5364 6633 7200 7200 8400 9000 9800
Total 8057 9707 10,400 11,100 11,900 12,700 13,600
About 27% of urban retail outlets dealt with food products,& an equal
proportion dealt with non-food items. The remaining outlets carried other
Fast Moving Consumer products
Types of Products
Sold
Number (000) Percentage (%)
Food 824 26.8
Other FMCG 1,430 46.5
Non-food 820 26.7
Total 3,074 100
Small retail shops with a shopping area of 300-400 sq.ft constituted about 64 % of
the total number of retail establishments in the country.
Large & very large retail shops (area of over 800 sq.ft) constituted only about 11
percent of the total number of retail outlets.
The presence of supermarkets in India was confined to larger cities & these retail
institutions accounted for only about 2 % of sales of FMCG
Type of Retail Outlets Proportion (in %)
Small 64
Medium 25
Large 8
Very Large 3
Total 100