The Hindu Business Line : Local stores undeterred by MNCs' entry into retail

Retail action
Food and groceries comprise nearly 75 per cent of the overall retail market and this sector is likely to see most of the action as corporates vie to capture a piece of the pie.

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Mumbai Jan. 28 As more and more corporates look to enter the retail sphere, the neighbourhood grocery store would seem to be under threat.

But local shopkeepers are not a worried lot. "Such new big format stores will not affect our business at all since we have our loyal customers in our areas," said Mr Hardik Lalani from Everfresh Stores in Dadar, Mumbai.

"At the most, we might lose about 10 per cent of business for branded products, but we are not worried."

Mr Yogesh Chheda of Chheda Stores echoed the sentiment and dwelled on the personal touch that stores like his offer, along with services like home delivery, giving them the edge over big corporates.

"We have been around for over 30 years and are not concerned about our customers going anywhere else. Look at how many malls that have sprung up in the past few years. A lot of them have had to shut down. The same thing will happen with these stores," said Mr Narayanji Lalji, a shopkeeper in Matunga.

Food and groceries comprise nearly 75 per cent of the overall retail market and this sector is likely to see most of the action as corporates vie to capture a piece of the pie.

There have been three major initiatives: Reliance Industries' Rs 25,000-crore plan to create 100 million sq ft of retail space by 2011; the Aditya Birla Group's Rs 15,000-crore retail foray; and Wal-Mart's entry in a joint venture with Bharti.

In addition, discount chain Subhiksha is expanding rapidly in Mumbai and the rest of Maharashtra.

Sensing the threat from MNCs, Sahakari Bhandar has tied up with Retail Concepts and Services Pvt India, a group company of Reliance, to source all its products.

In return, Retail Concepts will renovate all 18 branches of Sahakari Bhandar in Mumbai.

"Traditional co-operative stores like us face considerable threat. We realise that there's a need to change but finance is a problem," said Mr Lalit Dhakne, General Manager of Sahakari Bhandar.

Six branches have been renovated so far and have registered sales growth ranging from 84 per cent to 231 per cent in November last year alone.

"We have our loyal customers but we need support to be competitive and face the threat of MNCs," said Mr Dhakne.

Apna Bazar, another co-operative, has tied up with Radhakrishna Food Land for supply of some of its products.

On greater competition, Mr Mahesh Kambli, CEO of Apna Bazar, said: "We will definitely be affected but it is not a level playing field. These corporates have access to the capital market. Everyone says that they will put in their money initially and then go for an IPO. We don't have access to public money. Therefore, they have many advantages over us."

The size of the Indian retail industry was estimated at $32 billion in 2006, with organised retail accounting for four per cent of the total sector.

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