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Wednesday, February 9, 2011 w w w. f i n a n c i a l e x p re s s .

c o m FE Special: Haats of India 7


PHOTO COURTESY: RMAI

Rural markets is
where the action
is for marketers,
and haats are the
best bet for
companies to
reach out to this
burgeoning
consumer
segment. As these
hubs emerge as
the nerve centre
of distribution
and points of
communication,
an RMAI study
on haats,
available
exclusively to FE,
sheds interesting
light on how
India Inc can
cash in on the
opportunity

The ‘haat’ of rural economy WHAT SELLS


THE BIG PICTURE BUYERS & SELLERS
Total number of haats: Around 43,000 Brand awareness for
specific FMCG products
Establishment 30% States with max sold at haats (%)
of haats After no. of haats Shampoo 97
independence
10,380 Bathing soap 96

Toothpaste 91
Uttar Pradesh
Money spin 83
4,993
Talcum powder
Though people from all rural Face cream 79
Bihar socio-economic classes visit haats every
Detergent 75
week, the proportion of SEC R3 and R4 is
70% 4,078 comparatively higher than that of R1 and Biscuits 68
Before R2. Companies use haats as an
West Bengal Hair oil 67
independence awareness generation medium. Nearly
58

Catchment area of a haat


3,996 three-fifth of FMCG sellers at haats
purchase products on cash, while the rest
Salt

Confectionary 54
Jharkhand two-fifth of them buy on credit. Sellers
57 villages prefer to buy from cos that offer them FMCG products Market matrix
large haat 3,758 longer credit periods and higher margins. preferred at haats (%)
In case of credit purchases, the credit Haats sell almost all kinds of products that are needed for a rural
Maharashtra Groceries 63
period averages around 11 days. Average lifestyle, from agricultural products to hair pins. Though
21 villages
small haat
Stalls in a haat margin offered to FMCG sellers at haats is
Toilet soaps 60 agricultural products (53%) still have a major share,
9%, though it varies from state to state. manufactured goods (19%) and processed foods (6%) have
Figures in %
Detergents 56 gradually found entry. On any haat day, an average buyer spends
10
= villages ◗ Agri products 53 Average number of around Rs 40 on FMCG products. The spending amount varies from
52
◗ Manufactured visitors in a haat Tea state to state. It nears Rs 60 in states of UP and Maharashtra,
Location of haats goods 19 Shampoo 43 while is comparatively lower at Rs 22 in Orissa and Andhra
Large haat Small haat Pradesh. The average amount of sale of branded products by an
◗ Processed food 6
5% 52% ◗ Handicrafts 5
Maharashtra 22,300 10,500 Biscuits 36 FMCG seller is around Rs 2,224, while his total sale (including
Temple Market place Bihar 8,100 3,500 21
unbranded FMCG products) adds up to around Rs 7,521. To
◗ Forest products 5 Matchbox
increase their sales, a seller usually tries to visit several haats. On
Uttar Pradesh 17,000 4,100
35% 8% ◗ Services 4
Orissa 3,700 3,000 Cosmetics 18 an average, a seller visits at least three haats per week. Though
sellers in Maharashtra show a more aggressive trend of visiting
Bus stop Others ◗ Meat/Poultry 3 16
Andhra Pradesh 6,800 3,700 Oral care six haats per week, those in Orissa and Bihar largely concentrate
◗ Others 5 on two haats in a week.
Madhya Pradesh 11,000 4,600 Mosquito repellent 12
Location and size matters Tamil Nadu 15,000 10,200
A haat is spread over 5-6 acres and located about 24 km from the nearest big town.
Average 11,900 5,600
The catchment area for a large haat is comparatively high in states of Madhya
Pradesh (100 villages), Bihar (85 villages) and Orissa (79 villages), while it is
Sale of FMCG products per outlet on a haat day (Rs)
lowest in Andhra Pradesh (14 villages). In case of small haats, the catchment area Source of purchase of Sale of branded Total sales of FMCG Sale of branded Total sales of FMCG
in MP is highest at an average of 32 villages, while it is lowest in AP (11 villages). In branded FMCG for FMCG (including unbranded) FMCG (including unbranded)
the past, haats in rural areas were organised by zamindars and the rulers of
princely states and later by the panchayats. Today, in most regions, panchayats
haat sellers Maharashtra 2,793 13,196 Andhra Pradesh 339 1,741
are the organisers and owners of haat land areas. However, in states such as Tamil Bihar 3,450 12,490 Madhya Pradesh 421 4,231
Nadu (75%), Bihar (75%) and UP (55%), private parties are increasingly organising 17% 11% 72% Uttar Pradesh 2,864 7,229 Tamil Nadu 2,971 8,553
Retailer Company Wholesaler
haats. The participation fee on the haat day averages Rs 13 per stall. It ranges as Orissa 2,730 5,205 Average 2,224 7,521
stockist
high as Rs 24 in Maharashtra and low at Rs 6-7 in Bihar and MP.

Rural supermarkets
or haat contractor.
The haat system demonstrates the In-
dian ingenuity of keeping product
prices low. No high shop rentals, sales-
men salaries or investment in display
PRADEEP thingandeverythingthatvillagersneed reach products and brand messages to the haat every week. ucts to smaller villages, as shopkeepers shelves and shop interiors. The fee for
KASHYAP in their daily lives. These rural super- the six lakh-odd villages. At that time, Haats allow a touch and feel experi- from these villages attend three to four putting up a stall is a ridiculous Rs 5,
markets exceed the number of WalMart 50% of villages were not connected by ence of the product, satisfy the seeing-is - haats every week. whether you are a poor woman selling
stores worldwide and register a mind road and most households in these re- believing requirement and allow for live Some companies have used haats for vegetables or a multinational selling
boggling sale in excess of Rs 50,000 crore mote villages did not have electricity demonstrations—all important consid- branding by painting boundary walls or consumer goods. Haats have been
HAATS ARE the nerve centre of the eco- annually! Phew! and, therefore, no TV sets. Haats provid- erationsforavillagertobuyanyproduct. toilets with their brand messages as a around for 200 years and offer an indige-
nomic social and cultural life of vil- The first comprehensive study of ed a solution t to this problem. Each haat MART has been a pioneer in encour- permanent reminder for the large num- nous system of low-cost selling. The
lages. Producers and farmers depend haats in India was undertaken by me in caters to around 20-50 surrounding vil- aging companies to participate in haats ber of visitors that frequent the haat high-costorganisedretailbusinessmod-
on haats not only for the disposal of 1995fortheGovernmentof India.There- lages from where buyers and sellers for creating awareness and promoting week after week. Some companies have elfromtheWesternworldcanlearnales-
their produce, but also for purchase of port generated a lot of interest among come to buy and sell goods and services. brands in rural markets. Over the years, contributedtoimprovingtheinfrastruc- son or two when they decide to set up
their daily needs. corporates, as it was around the same By putting up a stall in the haat, a more and more companies have benefit- ture at haats, like raised platforms for shop in the highly price-conscious rural
Around 43,000 haats are held in India. time rural markets began to grow. The company could expose its products ed by using haats for below-the-line pro- sellers, providing drinking water and markets of India.
Each haat is spread over acres of land biggest challenge corporates faced in and communicate brand messages motions. Some companies have even toiletsforwomen,and,inexchange,have The writer is president, RMAI
and boasts 300 to 500 stalls selling any- tapping the rural market was how to to the 5,000 or more people who visit used haats for redistribution of prod- got branding rights from the panchayat & CEO, MART