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March 4, 2007

A Retail Tale

Peruse any news paper, magazine or journal of any frequency, perhaps that’s the only term grabbing your attention the most number of times these days. That’s no strange phenomenon, atleast according to what the theme of these articles convey. For a while let’s run-off from the contenders - Walmart, Carrefour, Tesco, Reliance, Tatas, Birlas, Godrej Agrovet, to name a few under the limelight - and their launch plans, strategic initiatives, investment monies, who’s who and their job-hops leveraging on the sector’s boom.

Enough of raised eye-brows after knowing the heights of campus placements into this sector these days. Yet it’s time to raise them back for a new reason; school placements have just begun. Yes, the sector has just started pre-placing 10 and 10+2 students to populate their shop-floors. May be that’s news for you and me, but not for the head-hunters minting through this would-be organized sector.

Let’s get on to the actual business, now.

Atleast in my case, being a serious and a keen listener helped me know the reactions of one of the victims of such retail bang. I then understood there’s something really serious about Soniaji’s letter to the PM regarding the ‘trans-national super markets’
I happened to go for a top-up at this pharma retailer and casually enquired about his diversified nature of business. Pharma, cell-phone recharge, rental flats and what not - Common, now that was not his business strategy or model. That’s just a linear resort to make his livelihood
Here’s a verbatim (yes, he speaks fluent English) of the reactions from this medium-built, fair, elegant and well-read family man in his late thirties who runs the above businesses. Overall, he is definitely unhappy.

Straight from the horse’s mouth...

“These stupid people give permissions to all those stupids who wish to enter India. Now India is again going back to the same old “ rule by foreigners” – difference being, till 1947 it was ruled by the British people, but now ruled by different-different countries together. They talk about independence and all but what is the use??(he was very serious on this line) We are still depending upon foreign people to develop. For example, Walmart is there. It is a very big mall. You also know Big Bazaar no?. These big-big malls sell medicines at discounts because they buy them directly from manufacturers. So all customers run to big malls. Middle-class and high-class public go there to buy medicines. The same medicines are supplied by me and retailers like me but we cannot give the same discounts. The reason is we can’t buy directly from the manufacturers. The stockists and super-stockists (these are the intermediaries, as I understand) come in between. The business is very down these days sir. Very tightly managing…
Also, the big-big hospitals
(corporate hospitals) are also a big problem for us. They establish their own medical stores inside the hospital and the patients buy all medicines with good margin from there itself. People come to shops like this for cheap medicines like Vicks action 500, paracetmol, excetra. I established this shop in 1989. At that time the road (seriously pointing to the main road behind me) had only one lane. Now it has a divider, with roads on both the two sides. At that time, I expected that within 10-15 years this area will develop, and I will have many customers due to the development. Even the fly over was not there at that time. Many big apartments are constructed. But no doctor is establishing his clinic here. They are working for corporate hospitals because they are paying nice salaries..(After a 3-second pause)….
Mtchhh… don’t know what to do. All stupid things are happening in India only”
(We could have continued further, but a senior citizen approached us and interrupted his flow by asking him for a cough syrup….“Chalo let’s continue sometime later” I said to the retailer waving my hand with an ironic smile and rushed to fill this space here)


Paresh Y Murudkar said...

This is a typical example of how people don't want to change and they blame the external events for the misfortune. I am sure there will be hundreads of such examples of shopkeepers facing grim future. But at the same time there will be millions of consumers getting afair deal in the household necessities. And I personally won't care for those 'middlemen' who have sucked enough blood in terms of huge margins for so many years. My post 'The Retail War' on my blog talks about this aspect.
I am in no way betting on the future of organized retail in India, for all you know it may turn out to be a disaster with capacity overflow. But purely from a consumer perspective (and which is most important), the low prices and (hopefully) better quality is a welcome move!

- Paresh

Swaminathan said...

Great observation. Its quiet interesting to know things from the horse's mouth. Retailing is a double edged sword. On one hand its going to drive the corner stores and on the other hand create an atmosphere of cut throat competition, however will it help customer???(is a question of concern). As these malls may create monopoly, forming a cartel, once they drive away all the corner stores. Would love to hear about that from you?????

Retailing will set standards for quality and price. However, what delights me is how are the corner stores going to fight these malls???. I have a feeling they will bounce back, if someone attempts to wipe them.

great job, loved reading it. Keep blogging