The article was effective enough to attract a large number of comments, most of them focused on the adverse impact of Cash and Carry, how FDI in retail would harm Indian interests, and the usual concerns.
While I am not a Walmart spokesman, I do believe that sharing some more information on this may possibly throw some light, and reduce heat from the matter.
Walmart already has nearly 20 cash and carry stores, and another 150+ retail stores in the form of Easy Day – in India. They are here, and are pretty much here for good – that is reality that we have to live with.
They are not the only ones who sell Chinese stuff in India – if at all, the quality of Chinese stuff that they sell might be marginally better than what we get otherwise. Given our constant value seeking behaviour, Chinese products have anyway become part of lives, whether we want them to or not.
Walmart are not the only ones investing in the Cash and carry format – Metro has started expanding, Reliance’s Cash and Carry Store has restarted in Gujarat, Carrefour is operating one in Delhi – so the big guys are pretty much here. The real challenge for the government would be to get them to invest in the back end, and develop infrastructure. Unfortunately they cannot build roads for us. The Government also must devise mechanisms that could encourage these companies (whether Indian or MNC) to invest a part of profits back into community initiatives – like contract farming, farm productivity, and definitely removal of the middle man. (something ITC tried to do with its e-choupal initiative)
Steps like these would help these large retailers integrate into the community, while ensuring greater productivity for themselves ( a glimpse of the Tata Sons model of how companies integrate into communities can be had here)
FDI in retail is a reality – our political leadership has to ensure that policy making be robust enough that it delivers the benefits it is supposed to.
Cash and Carry though, may have to contend with an Indian game changer after all – Kishore Biyani, long recognized by the industry as the Father of Indian Retailing, has launched another innovation – a mall for whole sale businesses! Read more about it here.
This idea seems to be an interesting proposition, as it would do away with the “kachcha bills” that usually flourish in the business – because the wholesalers would be licensed business persons. It would also make this channel more accessible to the public – since whole sale markets are typically frequented only by the die hard bargain hunters, apart from the small retailers. To quote from the article – “Our aim is to create a modern and a non-intimidating environment for the wholesale segment with a quintessential Indian lilt to it,” Sumit Dabriwala, managing director of the Group’s real estate arm Future Market Networks, says. “
The group plans to expand this to other cities – post its Bangalore launch – later this year. An innovation worth watching closely.
Another interesting article, appearing in a Singapore based publication was seen here. While not detailed enough, I believe it still raised a fundamental issue – how does modern retail expand when it is faced with a well entrenched mom and pop store network (of at least 5 million outlets !?!). There are very few locations, very high rentals, and consequently, higher break evens, higher daily sales targets and so the story goes – detailed here.
Lastly, a more serious and academic take on the whole FDI in retail issue – a far cry from my own humble take here.