Tuesday, September 16, 2008


Foreign investments in the retail sector are not yet welcome in India as the GOI policy does not allow 100% owned foreign entities to operate in the country in this area. But some of the global giants are already planning to enter one of the largest markets in the world through joint venture route. The success of Metro Cash and Carry so far is a pointer towards future direction of movement as far as foreign investors are concerned. Domestic players like Reliance, Godrej, Tatas, Bharti all are rushing into this sector with some sort of tie-up with foreign retailing organizations from where expertise and experience can be sourced.

So far only 2% of the retail market has been cornered by the so called organized sector (super markets, hyper markets and Departmental Stores) but this is predicted to grow into an avalanche once the sector is opened to foreign investments. If one goes by the statistics put out by different agencies there are about 8-12 million retail outlets in the unorganized sector though no one knows the exact figure in the absence of a centralized documentation system in the country. While it is understandable why foreign players are eager to enter India, what is not comprehensible is how thay can replace these traditional small traders who have become an inseparable part of the landscape of this country. They have carved out for themselves a niche place in the hearts of the consumers through tremendous good will and personalized services. Whatever limited impact the big retailers have been able to make is limited to a few urban pockets where there is large population density. The scope for replicating models of retailing prevalent in Europe, USA and other well to do countries is rather limited in India because of constraints of transportation and restricted mobility with low per capita automobile ownership, vital for access to large shopping facilities. The sky high real estate rates and non-availability of ready land, are further dampeners to the ambitions of big players. Ultimately the high over head costs due to the sheer size of the operations might not be offset by the scale of economy achieved by the big retailers as being hoped.

Against this background comes the news that the small traders are organizing themselves to face the potential challenge ahead in the retail market through meaningful strategic actions. The Confederation of All India Traders (CAIT) in collaboration with India Retail School is launching a project to train small traders to position themselves as worthy competitors to the big retail giants. The plan is to introduce the small traders to subjects like visual merchandise, better servicing of customers, marketing strategies and better monitoring of their operations. CAIT wants to set up 500 schools in different parts of the country to benefit more than 5 million traditional traders through attitudinal changes, adoption of contemporary approach in business and retention of their core customers. The one month duration course is claimed to be tailored to suit the convenience of the traders by conducting instructions twice a week, mostly during midday for two hours each.

While this is a welcome move and timely, how far it will be effective will depend on the response from the traders. One.of the inadequacies of the small trader system is indifferent quality of products, some times even adversely affecting the safety of the products catered by them. The common association of trading community with adulteration by many consumers has tarnished their image which needs urgent refurbishing. Similarly for sharing the aspirations and expectations of the consumers needs an understanding of the consumer mind and a helpful attitude to go an extra mile to make him happy will be a long term investment that will guarantee business and loyalty. Honesty and transparency must be the foundation for establishing a long lasting relationship and the small retailing shops have a built in advantage in the form of personalized equation with each customer which can never be possible in organized retailing format.

No doubt, David is bound to prevail eventually against Goliath in this unequal fight for the minds of the consumers in India! Long live David!


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