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Retail chains - good or bad?
Written By murali772 - 25 March, 2009
Bangalore Retail consumer issues Analysis Economy
Are hawkers losing out to corporate and chain stores? India FDI Watch and Action Aid, which studied the immediate and future impact of corporate and chain retails on hawkers, showed that hawkers' business is declining in areas of Bangalore they surveyed.
These NGOs told reporters on Tuesday that among those surveyed, 96% of hawkers and 90% of shopkeepers said their business was falling and 99% of hawkers and 72% of shopkeepers blamed it on new corporate and chain stores.
Vinod Shetty, director of the community-based organization ACORN (India), said: "Competition from new corporate and chain retail stores was the number one reason cited by respondents for decline in business. It's a direct threat to vulnerable sections of society.''
"In addition to hardships associated with illness, disability and death, hawkers deal with increased harassment and eviction drives of late. In the city, 100% of respondents said they paid regular bribes to the police and 97% said they paid municipal officials,'' Shetty added.
The study calls on policymakers to support crores of independent retailers across the country by maintaining FDI restrictions in the retail sector, preventing foreign retailers from entering the market through wholesale cash and carry, and banning corporations from engaging in retail trade.
Shetty added: "We have pledged not to support any political parties in the Lok Sabha elections unless their candidates take a stand for independent retailers.''
For the full report, click on:
http://timesofindia.indiatimes.com/Cities/Bangalore/Hawkers-losing-out-to-retail-chains/articleshow/4311481.cms
Now, I would like to believe that the ones directly affected by the retail chains are the kirana shops. As far as the hawkers are concerned, their battles have been with the kirana shops, and continues to be so, apart from those with police and municipal authorities. So, the coming on of the retail chains hasn't made any difference to them. Their plight is indeed quite sad, and there is a lot of sympathy for them. But, that's a different issue altogether, and needs to be addressed separately.
By clubbing the hawkers' plight with this issue, with the talk about 'the threat to the vulnerable sections of society', the Vinod Shetty's of this world are essentially using them as a proxy in their attempts to stymie, what I would consider, a healthy development whereby the middlemen get eliminated benefiting the producers and consumers in the process.
My wife now makes a regular monthly visit to SPAR in the Oasis mall in Koramangala, and she's generally thrilled with the overall bargain that it is turning out to be, and in a pleasant ambience. For the everyday needs, however, she depends on the local kirana shop. So, all that's needed of the kirana shops is to change the approach slightly. It can be a win-win for all, except of course the middlemen.
Muralidhar Rao
COMMENTS
s_yajaman - 25 March, 2009 - 18:21
Murali-sir, they should have done a survey of big chains as well. Business is falling for them too. This is probably due to the slowdown.
Walmart is watched with great trepidity each time it opens a new store. The rest of the neighbourhood shuts down. They have extraordinary leverage with suppliers, pay their staff unfair wages, don't allow collective bargaining, etc. I can imagine how a town feels when a sidewalk full of grocery stores, cafes, etc is replaced by one big box.
Another AMUL is probably needed in India - this time for grains and fruits and vegetables. Our rural supply chains are not very good. Not enough cold storages, no proper warehouse receipt systems. A good futures market will also help in smoothening prices.
http://en.wikipedia.org/wiki/Amul
Srivathsa
blrsri - 26 March, 2009 - 05:44
BigBazaar like other maills like total etc announces discounts in papers etc and I am sure many people go to get the product and many a times realize that its really not worth the discounted price either..and then end up browsing the aisles and picking up things which was never on our minds when we started out!
In the other case of the local angadi's, we exactly know what we need to pick up and in quanitites we need..that will actually cover the irrelavent discounts we get in the malls!
And coming to actual prices..a half litre gingely oil in mall costs btwn 80-100 and the same costs 50 at my angadi..
On a lighter note..an advice to all men folks here..please do not take your wives to malls..unless you can really control their spending on unwanted stuff..wich in most cases you cant!
idontspam - 25 March, 2009 - 18:45
A good futures market will also help in smoothening prices
..on futures trading in commodities. Trading in some commodities have already been banned.
blrpraj - 25 March, 2009 - 20:25
I think it is bad in the long run
- Initially the big retail chains will drop prices and force all the small "angdis" out of business. The disadvantage in the long run
- loss of many small businesses
- higher prices as customers are held ransom by these big retail chains as the good old stores (small businesses) have simply vanished
Retail chains have their advantages too though ..things like standardized quality etc.
silkboard - 25 March, 2009 - 17:00
The full picture has to include the other two key entities 1) producers/farmers, and 2) consumers. The supply chain mechanism in between is a detail that will play out to reward the most efficient systems.
Priority #1 - What safeguards the interest of producers?
- Proactive measures to prevent creation of monopolies at lowest levels of sourcing. Private monopoly, or cartel will be worse than the monopoly of sarkaari mandis
- Making sure that producers get access to wider markets (better supply chain, fast/safe/cold transportation etc)
- Access to demand forecasting so that producers/farmers can do some planning and prevent supply flood (will lead to lower prices like what regularly happens with tomatos in Kolar) or a shortage.
- Incentives for long term procurement contracts so that producer/farmer and sourcers share the risks.
Priority #2 - the consumers? Simple are their needs:
- Quality
- Cost
- Choice
Now, the kiraanas, chains, sourcers etc. Haven't the inefficiencies of unorganized retail and supply chain simply added to the costs we pay? Eventually, a hawker would pass on even the costs he incurs on "bribes paid to police and municipal workers" to the consumers, wont he? Is he the only real victim of the bribes etc that he paid? I think not.
But practically speaking, in our country, you can't just wish things away. There is a human aspect here, and changes need to be eased in and watched for social impact. To this effect,
- I liked on item in CPI-M's report on this subject (came out about 3 years ago). We must ensure that big chains don't use their deep pockets to take losses for first few years to wipe out local kiraanas by selling at deep discounts. Under the same token of "level playing" field, kiraanas and hawkers etc must pay the "full costs" of doing business, which would mean paying the rent for their business space, parking etc
- Can there be incentives to make kiraanas cooperate? There never was a need earlier, as they literally "cartelized" the market by selling at or above MRP (the MAXIMUM suggested price). They know the business, and the communities - can't they compete by joining hands?
- Can the chains be "forced" to hire x% of their workforce from local kiraanas and hawkers?
Oh my God. real long comment. And a boring one too.
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