The Hindu Business Line : Selling smart

The hype and apprehensions built over encouraging retail giants, both domestic and global, and India’s continued reservation on foreign direct investment in retail are all based on the fundamental premise that once liberalised, the major retail companies would make mincemeat of the ‘kirana’— the mom-and-pop stores that everyone is familiar with.

No doubt, India has kept at bay global retail contenders such as Tesco, Carrefour, Metro, ShopRite and Woolworths, with foreign investment regulations limiting them to franchises, and enjoining them to team up with local partners who would carry the native name out front, though the back-end systems might benefit from the foreign retail giants’ vast experience in big-store expertise.

India now rides on the pride of such household retail names as Bharti Group’s Fieldfresh, Mukesh Ambani’s Reliance Fresh, Adi Godrej’s Aadhaar rural chain, the Tata Group’s Trent and Infiniti arms, not to speak of the dynamic Kishore Biyani’s Pantaloon/Future Group, the K.Raheja family’s pioneering Shoppers Stop and K.M. Birla’s recent purchase of the 172-store Trinethra chain in the South.

India has said a decisive no to foreign retail stores. But the UPA Government appears to be subtly shifting its stance on organised retail from total opposition to letting major corporates into retailing.

In a written reply in Raya Sabha, the Minister of State for Consumer Affairs, Food and Public Distribution, Mr Taslimuddin, on December 7, extolled the benefits of the organised retail sector, which would reduce the cost of intermediation on account of economies of scale benefiting consumers and producers/farmers. It also enables the establishment of cost-effective supply chains and fosters more employment opportunities and improves the quality of employment in the long run.

Be that as it may, this correspondent saw a fascinating vignette unfold in the domestic retail segment.

A walk to the local vegetable market normally serviced by petty vendors has turned out to be an eye-opener. Here, the unlettered vendor is selling “Fieldfresh” beans in a neat packet along with the usual one he offers in loose form from his sack spread on the pavement. The beans from the sack are offered for Rs 10 per quarter kg, while the packaged one from the retail store is for Rs 12 per quarter kg. He is enterprising enough to get customers to go in for ‘company’ product as he gets a modest margin.

On being prodded, he says he got the company product from another person, but does not know if he is an employee of the company or someone who bought in bulk from the retail shop and sold it to him.

Yet another vegetable vendor conceded that he picks up ‘company’ vegetables from the wholesale market in Azadpur Subzi Mandi!

So even domestic corporate-promoted retail companies could see free franchising of their products by enterprising small vendors, with or without their approval, in the inimitable Indian way.

As long as this kind of entrepreneurship exists in India, retail revolution would not thwart native wisdom. “The fortune at the bottom of the pyramid” is undoubtedly being tapped by small-scale vegetable vendors in the neighbourhood.