amit wrote:Rajesh,
The problem, IMO is you are comparing apples to oranges when comparing the situation in Germany with that prevailing in India now. That's because India by several quantums has a far bigger potential for growth (I mean the internal market) that German has now or had over the past 20-30 years. What that translates to is there's more slack in the system than in Germany.
Apart from that, you miss the central reason for requiring organised retail in India. Due to a bad supply chain a horrendous amount of Indian farm produce is wasted - it either rots before it gets to the market or does not reach the market at all. Moreover whatever reaches the market is horribly overpriced in comparison to what the farmer gets for his produce at the farm, with the middle man siphoning off the rest.
What organised retail will do is take the middle man out of the equation by investing in cold storages, refrigerated trucks, the works. In short they will build up the supply chain network. Nobody but big retail has the money or incentive to do so and what large international chains can do is show us the best and most efficient way of doing that. And with the road infra getting better it would be possible. And processed foods (that is canned stuff) will also increase.
It will take many years to get to a situation whereby the length and breadth of India would be covered by organised retail and before that happens the most of the people who depend on work that kiranas provide will migrate to other professions.
In fact the last time I was in India I used to go regularly to a Big Bazzar outlet near my house to pick up things. On several occasions I saw an interesting site. And that was folks with a trolly full of one particular product say, hand soap of two, three varieties. I enquired with one of them and he told me that he runs a small kirana and it makes sense for him to pick up in bulk from Big Bazzar rather than wait for the distributors to get around to visiting his shop, his demand is low and so he falls way down in the priority order of these distributors.
IMO kiranas and big retail can live side by side and if the power of middle men are reduced I can assure you prices would come down and more importantly we'd have taken a giant step in tackling the persistent supply side inflation that is eating into the economy.
JMT.
amit ji,
First a little about what I prefer. I would like to see malls, shopping streets, corner shops selling their wares. Those kiranas on the corner, the mom&pop shops as one calls them in the States, they will of course be selling all types of stuff. But those shops which happen to be in the malls or in the shopping streets should concentrate only on one thing - women's wear, men's wear, perfumeries, dairy, fish, meat, fruits & vegetables, processed foods, Indian confectionery, namkeen, bakery, drugstore, telecommunications shop, electronics, household appliances, carpets, furniture, etc.
Here I am talking about how it used to be even before industrialization. Everybody used to sell one thing. Only this time the shopkeepers will not be selling their own produce, but what they buy from others. The specialization
The specialization would also bring down costs.
I think you are of the opinion that retail must necessary also control the logistics as the distribution is inefficient. I think one of the best distribution models is the post. The distributors companies can handle the volume. In fact there can be several distributor companies working at various levels of distribution. The logistics industry can be kept separate. If we want to really learn from the outside world, then it is the area of logistics, and not retail.
Another great model I see is car-sharing. Shopkeepers who buy similar products from one type in a given region can buy together bringing down the procurement costs due to buying in bulk. Many such networks of shopkeepers can come up.
The interface between the shopkeeper and the end-customer should however remain in the hands of the small shopkeeper.
By turning over the whole retail market to the WalMarts where one can buy everything from a pin to a car, we would not be solving the problem but creating a new one. We will be throwing the baby with the bathwater.
The baby is the retail market. The bath water being the inefficiency of our procurement and distribution networks.
You say that when the organized retail take over, the kiranas can look for a different profession. That is exactly my point. You have taken away the last profession he can self-employ himself in when nobody is willing to employ him as the lean times come.
Just look what a vast population we have. And when automation and mechanization and computerization is taking over the primary and secondary industries, or when the service providers would have already established themselves and when people start getting laid off, with their limited skill-set they would have nowhere else to go.
Efficiency can bring down the supply-side inflation, but for that we don't have to take away the last refuge of the poor man.
Probably because India is still so much in the beginning of its retail evolution, that India does not realize the downsides of a fully-developed organized retail market. It is unprecedented joblessness.
Jokes aside, it is never just a function of political savvy of the ruling party, though that is the big elephant...It is also about the political divide being willing to work across sides...The biggest bangs in PVNR's time came pre-Babri, in a period when LK Advani described him as the "best PM since LBS"! The biggest "reforms" in ABV's time were those that were grandfathered INC proposals - FRBM, Insurance...(Highways didnt require legislative sanction)...
There has to be give and take, and that doesn't mean giving just appeals and taking support!