The Hindu Business Line : Mega retailing – hype and ground realities

Kochi, Nov. 28 The vertical and horizontal inroads by mega retailing in the country’s business-scape have generated a whole lot of consumer concerns which are being viewed also as threats to the survival of the retail sector, which is currently a major provider of employment.

Presenting a paper here at a recent seminar on ‘Retailing: A Consumer Perspective,’ Ms Alice Mani Jacob, a professor at Kochi’s Albertian Institute of Management pointed out that “unhindered customer loyalty is a thing of past.

Consumers have affinity for the West, but they expect value for money and personalised services as the ones they get in the corner stores.”

The message is clear: the mega retailers who are making a beeline for an entry into the retail scene of the country may not make it big if they fail to come out with strategies built on the psyche of the general Indian consumer.

The arguments that the advantages that accrue to these mega retailers on account of their inherent professionalism, their ability to bargain on favourable terms with the manufacturers, their access to sophisticated technology, innovations and efficient supply chain management will get transmitted to the consumers in the form of best possible choices and adequate supplies to consumers of high quality goods at competitive prices need not be taken for granted, she said.

It is reasonable to assume that in the changed retail scenario, there is scope for convergence of interests of the retailers and the consumers as maximisation of consumer welfare becomes a predominant concern for survival and growth in the market place, the paper points out.

On the other hand, the paper adds, in the absence of organised consumer movements, the power imbalance between seller and buyer may cause these advantages to heavily get tilted in favour of the massive and powerful selling organisations.

“They may resort to predatory pricing to wipe out competition or may ignore the ordinary man on the street by failing to cater to the needs of low-value, high-frequency customers and thereby make poor consumers disproportionately disadvantaged” says the paper.

Another eventuality is that these mighty retailers may campaign a consumerist culture compelling people to spend more than what their needs and size of their purses warrant, the paper adds.

The impact on rural consumers also being pointed out as another negative feature of such organised retailing. Rural consumers have different needs and requirements. Many of them are cash poor but not time poor.

“How far and how fast the instant breakfast cereals and baked frozen beans will enter their shopping bags is yet to be ascertained” the paper says.

According to the paper, some important questions which need to be addressed include:

*Why consumers should opt for mega retailer system?

*Are the present retail market configurations efficient?

*Is there any consumer exploitation?

*Are the buyers able to make informed choices?

*Is there any power imbalance between the buyers and sellers?

*Will it be possible to induct normative parameters for monitoring the consumer friendliness or otherwise of these mega firms?