Indian Council for Research on International Economic Relations (ICRIER), in its report on the ‘impact of big retail on neighbourhood stores’ has supported organised retail in the country.
According to the report submitted to the Department of Industrial Policy and Promotion today, both consumers and farmers benefit from organised retailers. The low income consumers save more from purchases from organised retailers. The farmers benefit from organised retailers as they have the option to sell directly to organised retailers.
Besides, as a result of the entry of the organised retailers, there is no evidence of decline in the overall employment in the unorganised sector. However, the report admitted that initially, mom-and-pop stores, in the vicinity of big outlets, have seen drop in their sales and profits.
The report says that unorganised retail business is likely to grow at 10 per cent per annum from $309 billion in 2006-07 to $496 billion in 2011-12. The report also adds that the unorganised retailer will not be able to meet its growing demand and hence the share of organised retail is going to increase at a rate of 45-50 per cent per annum.
According to the report, organised retail, which currently contributes around 4 per cent of total retail sector, is likely to grow at much faster pace to increase its share of total retail trade to 16 per cent by 2011-12.
The study further recommends the facilitation of cash-and-carry outlets for sale to unorganised stores.
The study, however, did not deal with the impact of foreign direct investment (FDI) on traditional retailers. “This study has nothing to do with the impact of FDI on retail,” ICRIER CEO and director Rajiv Kumar told media. The impact of FDI on unorganised retail is being assessed by the National Council of Applied Economic Research.
The findings are based on a survey of around 2,020 unorganised retailers across 10 major cities, 1,318 consumers shopping from both organised and organised retail outlets, 100 intermediaries and 197 farmers.