THIS MAD RETAIL RUSH
There has been a long standing demand from the business media that FDI should be allowed in organised retail. Bharti has tied up with Walmart and already business conglemerates like Aditya Birlas( More Stores) RPG group ( Food world chain of stores) Future Group( Big Bazzar) Reliance( Reliance Fresh Stores) have invested in building space for stocking from perishables to hi-tech items. Already one chain of stores has reportedly on the verge of collapse. this was a model shown as replicable . Subiksha Stores which grew phenomenally over a period of time with revenues multiplying to a few thousand crores of rupees. Today, the company has not paid dues to suppliers for months and to thier own staff for 7 months. The MD of the Company rubbishes the theory that his revenue model has flopped and is still optimistic that he could bring the business on heels yet again. Let us salute his optimism. If only ICICI Ventures shares some of his optimism, may be things will improve.
The idea of organised retail is to offer customers cheaper prices. Well retail in india is done by neighborhood Kirana Stores mostly run traditionally by families involved in trade for generations together. In Tamil Nadu, Nadar community thrives on this model. they have also refined their business in as much as they offer better packaging , door delivery and CREDIT which none of the modern retail outlets offer. They were working on thin margins and developed business based upon trust and reliability. No doubt, such un organised retail could not prevent wastages due to decay of perishables like fruits,flowers and vegetables. The cost of wastage is running to crores of rupees. The retail chain is controlled by brokers and sub brokers who negotiate with farmers and cultivators and sell to wholesale traders who inturn sell to retailers. At every stage, the cost was adding up.
the retail behemoths were supposed to provide faster and efficient logistics, cold storage facilities to prevent decay of perishables etc. but ultimately, they had to emply more people, occupy more retail space for reasons of economies of scale, follow hi tech like Radio frequency identification for efficient billing, provision of CCTV to prevent theft and fraud etc. If such an arrangment could bring down prices, only the cultivator will suffer. the Farmer willbe squeezed for maximum benefits to the retail stores who will then add up thier operating costs and profits to sell to the consumer. This kills the middle men who were earning a livelihood being a conduit for a largely rural merchandise. The neighborhood Kirana Stores operator were closing down shutters.
FDI in retail will kill rural economy. It will throw may people out of jobs. the middle class which clamors for value for its money will be killing the farmer who will be forced to sell at uneconomic prices to the retail forces. universally also WalMart has been accused of such unfair trade practices. With all this we could end up with more Subiksha type of experiments with employees not being paid salaries and suppliers not being paid for months do we want this?
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