The Hindu Business Line : ‘Small retailer, safety net for the very poor’

India allows foreign direct investment in all retail sectors except the small mom ’n pop stores, said Mr Ajay Shankar, Secretary, Department of Industrial Policy and Promotion, Ministry of Commerce.

“There are political sensitivities in this sector,” he said, “the small retailer in some ways acts as a safety net for the very poor. We can’t do away with him,” said Mr Shankar addressing a panel discussion on retailing’s response to the new consumer class.

India’s growth, he said, has been domestic demand led and will remain so.

The smart entrepreneur will see the potential within India and offer products tailor-made to Indian preferences.

Tailor-made

He gave the examples of packaged paan masala, TV soap operas and Fair & Lovely cream as products that have been successful. In response to a question, Mr Shankar said that Indian laws enable private players seeking to establish supply chains to own their power plants, food processing plants and cold storages and that the private sector should take the initiative.

Consumer spending

Mr Nikhil Meswani, Executive Director, Reliance Industries, said that urbanisation, rising affluence and increased choice are the greatest drivers of consumer spending. Mr Ajay Kaul, CEO, Domino’s Pizza, said that every conceivable demographic segment is evolving and its preferences changing year on year.

Availability of credit

The availability of credit at the retail level will significantly influence trends, adding that now the cost of failing is low enough to allow retailers to experiment.

Education, healthcare, communication and recreation are the big growth sectors, he added.

Mr Steve Sanger, Chairman, General Mills, US, said one can never understand the Indian consumer by generalising. However, trends such as rising incomes, an expanding middle class, increasing urbanisation, a greater number of working women and more nuclear families will give rise to certain trends.

These, he said, would include a preference to buy convenience packaged foods and to spend more money on children.