The time for retailing in India, as an organised industry, has arrived.
Indian retail should be granted industry status immediately. There need not be any second thoughts or guesses on this. Retail is poised to be one of the largest employment avenues in India. This will enable provisions of various industrial and labour laws to be applied to the retail industry also, which will help to manage businesses more pragmatically and systematically.
Advantages of modern trade, and its recognition
If India, with a population of over a billion, enters the retail market, it will have an explosive impact in terms of creating employment and payment of taxes. It will strengthen the economy. The government, too, will become rich, with all the tax revenues! At the same time, it is my firm view that the retail sector should be made tax-free for a decade, to foster investment.
Modern trade, in terms of hypermarkets/supermarkets, also improves the quality of service and augments the range of products to consumers. A store like Ikea offers thousands of economically priced products, including furniture and storage spaces, which can revolutionise daily living for the middle and lower income segments of our society.
Supermarkets, being in the organised and visible sphere, pay taxes diligently, unlike many small private traders. They are governed by labour laws, unlike smaller traders who hire and fire staff at whim. Supermarkets also have tremendous potential in India. The market spending is estimated at over USD 300 billion.
Employment generation potential
An average grocery supermarket generates about 5-7 direct jobs per store of 1,000 square feet. For every such job created, there are about 7 jobs created indirectly – transporters, drivers, loaders, watchmen, etc. So, for every 1,000 square feet of retail space created, about 35 to 50 new jobs would be generated in the economy. A store of 100,000 square feet could generate about 5,000 jobs. India could easily do with about 10,000 such stores, thus creating 50 million jobs! And this could happen in about 10 years. When did India manufacture such large-scale employment ever in the past?
Consumers are assured of good-quality products and hygiene, because hypermarkets clean, grade and merchandise their wares like fruits and vegetables prior to displays. One of the biggest nightmares in India is to shop for vegetables and fruits. They are generally sold on pavements, coated with dust and soot. It is a visual delight to visit the fruit and vegetable section of a Carrefour or a Geant. Products from a dozen countries are washed, cleaned, graded and merchandised attractively.
Supermarkets offer competitive prices to consumers. They buy in bulk, and are able to negotiate better prices from farmers and suppliers. Since the supermarkets are very competitive, savings are frequently passed on to consumers.
Staff who work in the professionally managed hyper/supermarkets undergo regular training and development, which help enhance their skills. This also results in improvement of customer service. If the staff working in such stores perform well, they can develop long-term careers in retailing – that is, literally graduate from being floor salesmen to managers.
Socially responsible policies
As supermarkets and retailers grow, they also follow socially responsible policies. Marks and Spencer follow very sensible policies; to illustrate, when they select a new supplier, they first check the toilets and dining facilities of the staff. Only if the supplier clears this acid test, they proceed further. Which small trader even thinks of toilets or food for his staff? They are only pivoted on the cash in the till, at the end of each day. Professional retailers ensure they provide meals, cafeterias, and medical benefits to their staff.
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 deci