So it is official. A survey commissioned by the Commerce Ministry at the behest of UPA Chairperson Sonia Gandhi has confirmed in numbers what some would have thought to be political propaganda. Small retailers have been hit by the arrival of organised retail in Indian metropolises, with ominous signals in the form of a drop in sales reported by 50 per cent of about 1,600 retailers surveyed. Competition from branded retailers is a major reason for the decline in profits.
Coming as it does in the wake of street protests in several cities against organised retail players, the survey does beg a few questions on where the government could, or should, go in liberalising the sector. Global giants like Wal-Mart and Metro have already entered India through business-to-business retail ventures, while domestic players, including Reliance, the Aditya Birla Group and the Future Group, have been furiously expanding in India. Reliance has been talking of co-opting local retailers as partners with what seems, at best, a tokenist measure executed in a half-hearted manner. Retracing of steps in some cases and a shut-down of stores in some areas are part of the emerging reality of the retail revolution. Shopkeepers are an influential political force and have their own economic clout as well. A sudden influx of big money in the form of organised retail, the rise of malls, and an information technology infrastructure that enables efficient management of cash and inventories are key factors that sound warning bells to the mom-and-pop business. It is true that shopkeepers must wake up and smell the coffee and brace up to the new realities. However, on political and humanitarian grounds, it is wise to give them elbow room to reinvent themselves.
It is in everyone’s interest to calibrate the rollout of big retail. For both private companies and the busy urban consumer, organised retail is a natural fit. One option is for big retailers to co-opt local retailers at sound profits by offering lucrative partnerships or buy-out deals and digest the increased cost. Why kill the competition when you can buy it out? For the government, this would be the time to tell both sides that realities must be faced, be they economic or political. Buying and selling time may be the best retail trading activity for the State at this juncture.