Will these Goliaths oust the Davids?
Sachidanad starts his brilliant article by citing You’ve got Mail, the popular movie starring Meg Ryan and Tom Hanks. This unique love story, while fascinated the audience around the world, depicted a harsh reality of the unfortunate demise in the United States of the small, family-owned shops due to the onslaught of the corporate retail juggernauts. It is the fear of such incidents that cautions the feasibility of allowing foreign retailers to establish themselves in India.
Next to agriculture, retailing is the most widespread occupation in the country. The writer points out that Britain is incorrectly labeled a country of shopkeepers. Actually that appellation fits India better. Many Indians who are moving overseas, if they are not qualified enough to find jobs start setting up retail shops to make a living. The proof is the presence of Indians in the corner stores, convenience stores and the news stands in the UK, the United States and Canada. In India retailing is not just an occupation, it is the lifeline for the unemployed and the under employed who constitute the majority of India’s labour force.
India has the highest number of retail outlets per capita in the world, 5.5 per 1000 people. It is through these retail outlets that FMCG giants have established their empires in India. The new emerging trend in India is the higher shopping aspirations of a new breed of younger shoppers with more disposable income. The traditional one-man stores cannot meet their aspirations. The last five years witnessed the spurt of investment in the retail sector. The big companies have entered the market with their super shopping malls, department stores, hypermarkets, discount stores and specialty stores. According to a Pricewaterhouse report the organized retail industry will represent six percent of the total market in 2005 as opposed to the one percent in 1999.
65 percent of the country’s small purchasers buy on credit. That is why there is a significant growth in this sector. In its recent 2005 Global Retail Development Index, A.T.Kearney has put India in the top spot in attractive investment destinations for global mass merchants and food retailers, provided the government allows FDI in retailing.
Will the foreign retail giants oust the Indian retail majors? Not likely considering the two different types of clientele of the two sectors.