Business Daily from THE HINDU group of publications
Tuesday, May 27, 2008
ePaper | Mobile/PDA Version | Audio
Business Daily from THE HINDU group of publications Tuesday, May 27, 2008 ePaper | Mobile/PDA Version | Audio |
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Marketing
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Retailing ‘Organised retail not a threat to small stores’
To help small retailers improve efficiencies, they should be entitled to a better deal in terms of institutional credit, the report said. Our Bureau New Delhi, May 26 In what may be significant for the shaping of Government policy on retail business in the future, the Indian Council for Research in International Economic Relations (ICRIER) has said that there would be no long term impact due to the entry of organised retail chains on the neighbourhood kirana shops in the country. However, from empirical evidence, the ICRIER has found that though initially small stores located in the vicinity of big malls have seen a drop in sales and profit, the effect could be expected to level-out in the long run. The ICRIER study on impact of organised retailing on the unorganised sector was submitted to the Department of Industrial Policy and Promotion (DIPP) here on Monday. Supporting the entry of big retail chains, the report says that it would be beneficial to the farmers in terms of better price realisation and the consumers too would benefit because of competitive pricing. The ICRIER was asked to prepare the report focussing on the probable impact of organised retail chains on small retailers and vendors in the unorganised sector, effect on employment, impact on consumers, farmers and manufacturers and prices and overall economic growth. There has been “no evidence of a decline in overall employment in the unorganised sector as a result of the entry of organised retailers,” the report said. Beneficial to farmersIt further said that farmers would be the major beneficiaries because they would get higher prices for their produce by selling directly to the big retail chains while the consumers, particularly the lower income groups, would save money. “Profit realisation for farmers selling directly to organised retailers is about 60 per cent higher than amount received from selling in the mandi,” it said. “While all income groups saved through the entry of the organised retail purchases, lower income consumers saved more,” the ICRIER said. On the policy front, the report suggested introduction of a nationwide uniform licensing policy for setting up multi-location retail chains. The retail sector has the potential to become a $590-billion industry by 2011-12, the report points out. Talking to presspersons, Director of ICRIER, Dr Rajiv Kumar, said that the study covered 10 major cities. “This study has nothing to do with the impact of foreign direct investment on retail,” Mr Kumar said. Advantages remainThe advantages of neighbourhood kirana stores such as proximity, leverage on credit sales, bargaining choice for customers, home delivery and convenient shop timings would remain even after the entry of big retail chains, the report noted. In order to help the small retailers improve their efficiencies, the report said that they should be entitled to a better deal in terms of institutional credit. On the farmers’ side, the study recommended formation of farmers’ cooperatives to sell directly to big super markets. Simultaneously, unorganised retailers should also form cooperatives and associations for direct procurement from suppliers and farmers, eliminating middlemen. The report recommended that wholesale markets be modernised through public private partnership and the Competition Commission be strengthened to check collusion and predatory pricing by big players. The DIPP, which had commissioned ICRIER to undertake the study last year, has now asked it to gather further inputs from all stakeholders and invite comments from the public. More Stories on : Retailing | Marketing Research
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