I do feel concerned about our retail markets, should MNC giants enter the India market and drive consumers away from small retailers. Increasing ownership stakes and easing entry will only compound this issue. Surely, one would question the TRUE REAL need for allowing MNC giants free entry in our markets. Its not as if we have a badly shaped retail system, or that the demand market isnt organized. Both these components are sound, well established and abundant. In fact, it is this domestic system- domestic demand and supply- that were the main drivers behind India's strong survival and emergence through the 2008 sub prime recession. Questions therefore are warranted. Why would we like to disrupt this amazing ecology by bringing in foreign players, take away jobs of millions of retailers, increase inflation tendancies, and lose the tightly bound local control?
But there are some fundamental facts also, that need to be looked at, in the way they exist in India. By nature, a walmart is not competition to the local provision store or retailer. Instead, a walmart or tesco, with their big department stores and walkins, shopping carts, bill counters, sections, and ofcourse, low prices, are more similar to the likes of Big Bazaar, Magnet, Reliance mall etc. The fundamental nature of such a business model is bulk purchase- high volumes, low prices and less frequency of buying. Consequently, I believe this is not a big major shift in the India buying and retail patterns. The likes of BigBazaar, Magnet etc already exist in good tandem with local retail, and such business models and purchasing trends are already in place. If anything, therefore, i'd think its these big retail malls that need to be more cautious and wary of MNCs than the smaller retailers should be. Plus, the nature of buying at a small retail store is more frequent, trigerred by the mandatory short value purchases either over phone, or by a quick walkin. Walmart, or tesco or magnet, this will never really change or go down with time.
Ofcourse, this is not to mention the retail sector will not be impacted at all. In fact, it is really difficult to predict exactly how much the entry of a particular segment can impact the incumbents, unless that really happens. And, in a huge huge country like ours with such diversity and complexity, it is futile to conclude anything at this stage. FDI in retail does bring out concerns, but it also brings with it, due investments, better products, choice and health in the system. And lets not forget the incremental benefits it promises to bring in to our farmers by way of providing more buying choice/buyers for their products.
But there are some fundamental facts also, that need to be looked at, in the way they exist in India. By nature, a walmart is not competition to the local provision store or retailer. Instead, a walmart or tesco, with their big department stores and walkins, shopping carts, bill counters, sections, and ofcourse, low prices, are more similar to the likes of Big Bazaar, Magnet, Reliance mall etc. The fundamental nature of such a business model is bulk purchase- high volumes, low prices and less frequency of buying. Consequently, I believe this is not a big major shift in the India buying and retail patterns. The likes of BigBazaar, Magnet etc already exist in good tandem with local retail, and such business models and purchasing trends are already in place. If anything, therefore, i'd think its these big retail malls that need to be more cautious and wary of MNCs than the smaller retailers should be. Plus, the nature of buying at a small retail store is more frequent, trigerred by the mandatory short value purchases either over phone, or by a quick walkin. Walmart, or tesco or magnet, this will never really change or go down with time.
Ofcourse, this is not to mention the retail sector will not be impacted at all. In fact, it is really difficult to predict exactly how much the entry of a particular segment can impact the incumbents, unless that really happens. And, in a huge huge country like ours with such diversity and complexity, it is futile to conclude anything at this stage. FDI in retail does bring out concerns, but it also brings with it, due investments, better products, choice and health in the system. And lets not forget the incremental benefits it promises to bring in to our farmers by way of providing more buying choice/buyers for their products.
What concerns me though, for our retailers,is not the FDI, but things that happen on the ground..Cheaply imported sub-standard goods have been flooding our markets since a long time ago.. On every festive occasion, we see such goods flooding our markets and affecting business of local retailers,,,Not just here, even on an everyday basis, we need a system where our retailers at the smallest level get good values for their products...And frankly, I dont believe FDI can impact this any more negatively or positively. Lets give that a try, but lets also look at the real problems on the ground.
No comments:
Post a Comment