Wednesday, October 10, 2007

In India, killing the corner shop

When in India, if you have forgotten to pack toothpaste, or you have run out of cigarettes, you can just step out, and buy it from a small shop, around the corner. The store is usually open past 10:30 pm in the night, and if the person running the store does not have what you want, he will offer to deliver it to you.

The landscape of India’s cities and small towns are dotted by these small shops, most of them pop-and-mom outfits. They are very personalized operations that know you and your family, and may even let you pay the next day if you are short of cash, or in a hurry. They are also places for the people of the neighborhood to congregate for an evening chat.

Now these retailers feel threatened that they could be driven out of business by Western style super markets like Wal-Mart, Carrefour and Tesco who have an eye on the Indian market.

So far the Indian government has kept the foreign retail chains out of the market, by blocking foreign retail giants out of India, but local retailers already face competition from recent forays into large-scale retail business by big Indian groups like Reliance of Mumbai, which is setting up a chain of Reliance Retail stores, across the country, ahead of foreign competition.

More than 20,000 traders, farmers and shopkeepers protested on Wednesday against the entry of private retail giants like Wal-Mart into India which they say would destroy millions of livelihoods, according to a report from Reuters.

Retailers are large vote banks. Reliance too would perhaps want to delay the entry of foreign retailers until after they have their act together, and the business house has strong connections with the Indian government.

In the long-term though, the Indian market will not be able to resist the entry of multinational retail chains. What will that do to the traditional retailer ?

It seems that the corner shops will still have their traditional customer base. Folks will not drive some miles to a supermarket, and stand in serpentine queues to buy a tube of toothpaste or a pack of biscuits. Besides corner shops offer relationships that the large supermarkets do not. It is true that large supermarkets will offer loyalty cards and coupons and a variety of schemes, but that in itself will not remove the sheer convenience of the corner store.

The large multinational retail chains may however squeeze out the small retailer by a stronger control over the supply chain. Because of the volumes they will purchase, they will be able to offer the best produce from the farmers, cut off intermediaries, and generally make sure the best merchandise at the best price comes to their chain of stores. That would mean that people are more likely to do their volume purchasing at the supermarkets, to take advantage of the discounts.

Will there be enough of daily business still left over for small retailers ?

It is too early to sing an ode to the corner retail store. But the day these shops roll down shutters will be a very sad day indeed not only for the retailer but for his customers. It will be the end of a timeless tradition in the country, that served well both the retailer and the consumer.

No comments: