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Kirana stores can co-exist with Wal-Mart

With the highest store density globally, India has around 12 million re tailers. With 21 million total employment, retail ranks second in turnover after agriculture. Of this, only 3 per cent is 'organized' retail, mostly in the urban areas.

india Updated: Jan 22, 2006 23:32 IST

With the highest store density globally, India has around 12 million re tailers. With 21 million total employment, retail ranks second in turnover after agriculture. Of this, only 3 per cent is 'organized' retail, mostly in the urban areas.

Expansion of organised retailing generates direct and indirect employment at the cost of displacing some jobs in medium term. For India it is estimated to increase employment by 8 mil lion, assuming its share goes up to 8-10 per cent in the next five years. Retailing in the US accounts for 10-11 per cent of all jobs against 7 per cent in India. This sector benefits mediumskill youth workers, a group with high unemployment rates, and offers skill upgradation, higher wages and better employment conditions.

India's retail sector accounts for 10-11 per cent of GDP and is growing annually at 7 per cent. FDI inflows would further mobilise resources and multiply impact much beyond retail. Ben eficiaries include those in construction, manufacturing, food processing, packaging and logistics, farming and small enterprises.

India's apprehension that large international players would lead to a massive displacement of jobs can be addressed by the Chinese experience. Europe's largest home improvement retailer Kingfisher Plc's B&Q retail chain in China has a direct employee base of 5,300 with only 7 expatriates. One gets the full picture by looking at employment opportuni ties it provides through over 12,000 suppliers and service providers. It sources 97 per cent of its merchandise locally.

A sizeable self-employed majority, with little formal skills, is trapped in retailing due to lack of other options. A recent CIIPwC study holds that only those working in the mid-category stores are likely to be displaced in the mid-term. In China traditional retailing has evolved and grown alongside organised retailing, the latter's share being only 20 per cent, according to McKinsey figures.

According to a study by IMAGES and KSA-Technopak, India's organised retailing is unlikely to expand beyond 9 per cent over the next decade despite annual growth of 25-30 per cent. Obviously it can't completely replace corner stores who have a `niche position', and can adapt, innovate and expand to co-exist with global chains. Those shopping at glitzy supermarkets may still buy milk and bread from local kirana shops. In Mexico, local stores have increased their share by 2 per cent despite FDI in retail.

First Published: Dec 14, 2005 14:25 IST