Will FDI in retail improve customer service?

B.S. RAGHAVAN | Updated on March 12, 2018

Somehow the very mention of FDI in retail conjures up visions of Walmart. One gets the impression that Walmart is looked upon, or looked up to, as somewhat of a path-setter and standard-bearer of FDI in retail.

No wonder, therefore, that Karan Thapar’s choice for his Devil’s Advocate programme on September 30 fell on Rajan Bharti Mittal, vice-chairman and managing director of Bharti Enterprises, which has an on-going relationship with Walmart. The discussion was almost wholly devoted to the lines along which it would develop under the new policy of multi-brand retail. A similar talk show on another channel with the Deputy Chairman of the Planning Commission, Montek Singh Ahluwalia, was also littered with references to Walmart.

Opponents of FDI in retail also treat Walmart as its symbol, trotting out the various allegations of unfair trade practices against it.

I am not against FDI in retail and I even welcome it for the larger benefit of the nation. I do not think that there is anything to fear from the entry of FDI so long as we are clear in our minds about channelling it to bolster the nation’s interests and priorities, and establish monitoring mechanisms to that end.

The industrial countries have certainly had a long experience in running mega-organisations. Over the years, they have evolved techniques, standards and practices in procurement, marketing, research and development and overall management which can without doubt stand India too in good stead. FDI can help in reaping the advantages of cross-cultural synergies across national borders derived from the purposeful utilisation of talents, skills and resources.

Of course, this will call for India being constantly on guard against any particular entrant-firm manipulating the system to dominate the market and resorting to unacceptable sales and marketing methods. A great responsibility devolves on the National Competition Commission to ensure a level-playing field and fair competition among indigenous industries and foreign investors.


To me, the one crucial test in which firms, both in India and abroad, have begun to fail miserably is with respect to customer orientation and customer service. Taking Walmart itself, a recent report in a daily in the US carries in bold letters the headline, “Walmart Customer Service Stinks: Retailer competes in many categories, and flunks almost all”.

The July issue of Consumer Reports names Walmart among the worst in customer service for its retail service in eight out of 21 industries evaluated, including retailers for appliances, electronics, cell phones and supermarkets. The American Customer Satisfaction Index, which is based on interviews with about 70,000 customers annually, and gauges opinions on several different industries, also found Walmart “the least popular of the major grocers”.

Actually, this oppressive sense of dissatisfaction applies to many other firms in the world. The precipitous fall in the quality of customer service is fast becoming a universal phenomenon. An article in The Economist of September 22 reveals that in 2012, a third of the 160 firms surveyed were rated by frustrated customers as “poor” or “very poor”.

In fact, surveys in industrial countries reflect the prevalent anger among customers against the ill-treatment they undergo at the hands of service-providers and suppliers of goods and products of every description.

Slipping badly

The same article says ruefully: “Companies have paid lip service to customer service for years, yet still treat customers like serfs…they use new technology to build barriers between themselves and the paying public. It is, for example, almost impossible to call a company and talk to a human being….” It goes on to describe the torment through which customers are put when they try to get any of their grievances redressed.

According to Consumer Reports, the customers are resentful about companies “deliberately making it difficult for them by burying phone numbers, sidestepping calls and steering customers to online FAQs instead of live human beings.”

The strangest part is that it is the private sector that is seen to be slipping very badly in customer service all over the world. Many customers in India feel that the public sector, and occasionally, even government departments, show greater responsiveness and urgency than the private sector. That has at least been my experience in most instances.

Will FDI in retail improve customer service? On present showing, drawing on customer feedback world-wide, the answer is: Unlikely.

Published on October 02, 2012

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