Growth of Retail in India : Boon or Bane? - Page 2

Any new views 😛 !
please post your views and help people like me learn something about "Economy"

http://issuesbehindissues.blogspot.com/2007/08/super-markets -in-india-boon-or-bane.html

nice article. addresses the issues under debate here 😊



Super markets in India - boon or bane?

Recently Wal-mart announced its entry into India in partnership with Bharti Enterprises. It was well on the cards for sometime. But still the announcement generated protests in different parts of India by small shop (Mom And Pop - MAP shop) owners. They think that Wal-mart is a big-size, fire-spitting dragon which if let in, will burn all the MAPs. Long term picture may not be very different if these shop owners just hide behind their counters without rekindling their own fire to fight the big guy.

Wal-mart plans to setup 10-15 stores in India by 2015. Each Wal-mart store currently attracts average 4000 visitors per day. If the 15 stores attract 4000 customers from day one, then roughly 60,000 Indians will visit Wal-mart daily or assuming grocery shopping frequency of 2 weeks, around a million customers will visit Wal-mart. Today India has a population of 300 million upper and middle class people or 60-70 million families. By 2015, this number will grow to 100 million if we assume a conservative CAGR of 5%. So even if Wal-mart is building 100% customer base from day one, then it will attract only 1% of India's upper and middle class families.

Entry of super-markets will be good news for those currently working in the retail industry. The current situation for Ramus and Shamus is not very encouraging - 10-12 hours of work every day, no rights, no job securities, no medical insurances or any other perks and all this for meagre salaries of Rs. 2000-3000 per month. In the new super markets, their working conditions will be better, their salaries will be better and their self-esteem will be higher since they will see themselves as part of a big organization. They will have to acquire new skills though to be saleable to these big super markets. There are concerns about those who cannot be retrained because they are illiterate or they are old or they don't have enough money for retraining. The concerns are that they might be left out of the current boom. But the 'complete' transition to super market culture wouldn't happen overnight and may take more than 20-30 years. That is enough time for the current generation of non-saleables to see through their life in the MAPs and not feel any real threats from super markets.

Entry of super-markets will be good news for consumers too who will have more choices, and cheaper goods. There are many products such as processed food which are not available on a large scale in India. Not that they are expensive but the Indian retail industry never provided them, and consumers never demanded them. It might be a chicken and egg problem which we can discuss offline. But the point is that with growing affluence, consumers demand for better brands, for packaged products is increasing and they will see these demands being fulfilled by super markets. It will be super markets that will flourish the retail supply industry in India. So the consumers will not complain the entry of super markets.

It is not necessary that after 20-30 years, there will be no place for MAPs in India. Take Singapore as an example. MAPs coexist in large numbers with super markets such as Carrefours, Giants and Cold Storages. MAPs cater to needs of two types of customers. One type caters to convenience. These MAPs are in the neighbourhood and stock goods that one needs on a more regular basis and saves a trip to the super market in emergency situations. The second type caters to economically lower class of the society, those who are highly price-sensitive and who don't care about shopping experience. MAPs in India can also reposition themselves to better target the evolving customer needs. People like me think that Indian retailers, with their strong business acumen, customer service focus and survival skills, will be rediscovering themselves and will find their own niche.

Even if the recent protests were not against super markets per se but against foreign super markets, giving Wal-mart some tough competition will be Indian super markets such as Reliance, Big Bazaar and numerous local imitations. There is not much to worry. The Wal-marts and Carrefours of the world are not colonising Indian retail industry.

One loser from the super market boom in India will be resource-crunched earth. Natural resources are increasingly becoming rare species and increased demand for consumer goods will quicken the pace. One can just hope and pray that marketers don't entice people into buying aluminium foil, plastic wraps, kitchen towels, etc. and Indians, who are still 'surviving' without such products, find their current practices healthier and don't give in.

I have fond memories of eating ice cream from our local ice cream wala during summer holidays. As the hot summer sun goes down and the evening approaches, ice cream uncle comes on his bicycle. We run to the front door at the sound of his bell, ask him to stop while we convince mom how much we deserve the ice cream. In the meantime, my brother is already waiting for a signal from me to tell the ice cream uncle to put one delicious scoop in each cup. That one scoop of ice cream used to give us so much satisfaction and the experience left so many fond memories. The super markets, with their sophisticated supply chains, get us huge ice cream packs at much lower prices. As a result, one doesn't need to wait for ice cream wala, all you need to do is reach the refrigerator.

But who knows, maybe my ice cream uncle will supply to Wal-mart and I will atleast be able to enjoy the same taste, if not relive the same experience.

boon if someone ended up buying some mall space a couple of years ago. ab tak poori nayya paar 😛 😉 😉

Originally posted by: chatbuster

boon if someone ended up buying some mall space a couple of years ago. ab tak poori nayya paar 😛 😉 😉

😆😆😆 and here i was..droping by hoping to catch some nice, lengthy analytical post from our finance/econ guru😆

Its more like people/stores etc never go out of businesss in india.. i never heard od many go out...so if the retails go beyond some point the owner will be seen sitting on a stool just outside his store biding his time... until closing time.... boon or bane who cares.. people will benefit for this for sure... competition bet' merchants is always a boon for the buyer... 😊

i agree that it is a boon for consumers but definitely a bane for mom n pop stores and the wholesalers. big retail stores like big bazar etc will be buying directly from the manufacturers. this will hurt the wholesale segment of supply chain adversly...and the savings will be passed on to the consumers.

i still have mixed feelings about the effects they will have on the overall economy. a part of me thinks they are a boon as they create more jobs and minimize product costs but then i also feel for the people who'll be out of business because of these big retails over the period of time. but the latter is the price one pays for development.....i think.

Big retail is always a bane. I remember the India when I was a kid. The little family owned shops every where. The doodh wala delivering milk and bread in the morning. Going to the same grocer, vegetable vendor, fruit vendor and seeing the same familiar faces. I remember the system of 'account' with the stores. When we ran out of pocket money we would buy pepsi at the grocer and say 'account me dal dena' and at the end of the month dad would be furious at all the pepsi we sneakily bought.

People say a lot of things about dishonesty in India, but I miss the Indian small store system. Walking into a store and being greeted by the familiar face that recognizes you and knows who you are. The personal service that knows what kind of fruits and vegetables you buy, what candy the kids crave. When my grandmother hurt her foot and was confined to the house the grocer, fruit vendor and vegetable vendor would deliver fresh produce at home every few days.

Such service is not available in big retail. I honestly do not like big retail stores in the USA. The associates are either rude, stupid or bored. It seems like a big economic boost in the beginning, but in the long run it kills small family owned business and takes service out retail and makes it a cold mechanical profit machine and not a service.

In UAE where new Malls and Supermarkets are opening everyday, the small grovery stores also continue to thrive...

they provide customer service in form of home delivery( they will even deliver one potato to your house if you asked them too and that too at midnight), credit( flexi payment options: pay weekly, even monthly and small credit is always allowed)

When I was in Mumbai 3 years ago I had seen the small vendors for fruits and vegetables taking your orders on phones and delivering at your door step...

If the small vendors work on these strengths maybe they can survive and co exist with the giants...but if this will remain a sustainable advantage remains to be seen!

Originally posted by: TallyHo

In UAE where new Malls and Supermarkets are opening everyday, the small grovery stores also continue to thrive...

they provide customer service in form of home delivery( they will even deliver one potato to your house if you asked them too and that too at midnight), credit( flexi payment options: pay weekly, even monthly and small credit is always allowed)

When I was in Mumbai 3 years ago I had seen the small vendors for fruits and vegetables taking your orders on phones and delivering at your door step...

If the small vendors work on these strengths maybe they can survive and co exist with the giants...but if this will remain a sustainable advantage remains to be seen!

Here now here small stores are also doing like this,( but not in night) taking nominal profit, and with honesty. I that could make them survive.