WORLD RETAIL CONGRESS

Partnership with vendors

The more enlightened retailers and supermarkets become partners with their suppliers. They collaborate to improve the basic product itself. For instance, McDonald’s research centre works with farmers to improve the quality of the potato they use for their french fries. The growth of hypermarkets in India will benefit the agricultural sector through backward linkages with agricultural universities and farmers, bringing about improvement in yields, augmentation of ranges, etc.

Wal-Mart is reputed as the largest private employer in the world. It employs an estimated 1.9 million people. It is also the world's fourth largest utility or commercial employer, only behind the army of China, the National Health Service of the United Kingdom, and the Indian Railways. If organised retail is recognised as an industry in India, it is a matter of time before Indian retailers will be giving international operators a run for their money, by competing with them globally in customer offerings.


Government’s retail policy in the immediate future

On an operational basis, the central government should:

a) recognise retail as an industry;

b) consider giving the industry a tax break.


Retailing – not a rocket science

Whilst the Centre has principally been positive, its mood fluctuates still, depending on the latest political straw in the wind. This is due to the fact that we have an informal coalition in power and, also, retailing is uncharted territory in India, for the government. However, it needs to be underscored and lucidly understood that retailing is a very simple business. It is not nuclear technology!

If a single party had been in power, the decisions would have been more categorical. The manner in which the nuclear deal with the United States has been mauled around, would be worrying the government.

The dilatory tactics of parties, politicising the arrival of organised retail, will be short-lived. The political parties in India surely realise that the Vaticans of Communism – specifically, Moscow and Peking – have turned fashionably capitalist! Russia and China are welcoming hypermarkets and western brands, with trumpeting musical bands at the airports.

The government is procrastinating over the FDI policy because it is tentative about the impact of organised retail on the small shops. Certainly, there will be a fallout. The smaller and marginal outlets will be impacted, and the more incompetent ones may have to shift to other businesses. But then, India abounds in opportunities.

Small stores contribute 50% to 70% of business

It may interest the government to know that even in many second-world countries like Indonesia, Brazil, Venezuela, Colombia and Saudi Arabia, which abound with international hypermarkets, about 50 to 70 per cent of the groceries, vegetable and fruit trade takes place through the traditional stores.

So, hypermarkets and malls will not sound the death-knell for small stores. In fact, many small stores flourish more, because their sales increase. Customers do not visit hypermarkets at the drop of a hat. A visit to a large store has to be planned. For daily grocery purchases, consumers continue to visit the cornershop.

Interestingly, with the arrival of modern retailing and hypermarkets, the smaller neighbourhood stores invariably spruce up in terms of layout, hygiene, merchandising and customer service. Thus, the entire trade becomes more hygiene- and customer-conscious.

The prospects of Lok Sabha elections in the near future could make political agendas of the retail industry and the large investors. Some weak political parties could rabble-rouse sections of society and galvanise them, in a slapdash bid to garner votes.

This would be inopportune. It is a sorry state that political parties pick up such issues and magnify them to win some votes. Nevertheless, such political expediency is to be expected in democratic societies like India. Large sections of the population are yet illiterate, and need meaningful employment, and the red herring of exploitation by large corporations can garner votes. 

The leaders of organised retail must make a determined bid to allay any illusions of unemployment among middlemen, or their dictating low prices to farmers. On the contrary, there will be massive job generation, and farmers will benefit through improved price realisations. This information needs to be disseminated to members of parliament, central ministers, and even the public at large, via newspapers, journals and the electronic media. Chambers of commerce and industry associations should ensure that the advantages of organised retail to the country, trade and consumers are communicated effectively.

As we debate this issue, I will share my favourite quote regarding Communism. It is said that anybody who is not a communist before the age of 25, should have his heart checked, but anyone who is a communist after the age of 40, should get his head checked!

The new supermarket operators in India should assimilate and absorb some of the vendors (who could be displaced) as suppliers, so that they would be ensured of continued livelihoods. Partnerships for supplies, with these vendors, will reduce their opposition to modern trade.

The protest against organised retail will obviously delay the retail revolution in India, but only marginally. With a 9 per cent growth in GDP, and augmenting income and employment opportunities, the Indians are in a mood to spend and live well. So, we might as well get all the brands to India, and let the consumers spend in India. Otherwise, these Indians will be travelling to London, New York, Singapore, Hong Kong, or Dubai to buy their Rolexes, Guccis, Versaces or Armanis. Why let our foreign exchange be spent in foreign countries?

Brazilian experience

About a decade ago, when I lived in Brazil, whenever I retuned to India on leave, I would be buying my requirements of alcohol, tobacco, etc., from London airport, simply because I was not sure the duty-free shops at Indian airports would have what I needed. And I was upset to expend foreign exchange at a foreign airport.

The story was diametrically opposite when I returned to Brazil. Sao Paulo has a massive supermarket as a duty-free shop. Travellers to Sao Paulo did not buy anything at foreign airports. The duty-free supermarket at the airport, after arrivals, had everything you needed to buy. And the rules were generous. You were allowed to buy 12 bottles of alcohol or wine, instead of the 1 bottle that India allowed then or the 2 bottles permitted today.

Our duty-free shops at all international airports continue to be pathetic. Tourists form their first impressions about countries within the first 30 to 40 minutes of their arrival in a country. A peep at the presentations and merchandising at our arrival duty-free shops would make any tourist cringe. Sure, Delhi has taken a positive step; their outsourced shops are more inviting and customer-friendly. Our duty-free arrival outlets need to be totally revamped to makes them alluring and cheerful.

However, even these rudimental improvements will not ensue, if organised retailing becomes an unnecessary political issue.