‘Organised retail boom won’t affect street corner shops’

“The boom in organised retailing in India would not affect the traditional street corner shops in the country” said real estate guru David Fischel. Elaborating further he said organised retailing would make its own way increasing size of the market and create new jobs in the country.

Fischel, who is CEO of UK based $18 billion realty major Liberty International, said organised retailing would help improve the efficiency of the manufacturing and agriculture sectors. He said organised retailing helps develop efficient supply chains, which in turn improves the efficiency of an economy.

Fischel said, In country like India, where 64% of consumption drives GDP, growth of new city centres and malls would spur consumer spending, which , in turn, would drive growth in GDP. This would lead to improvement in government revenues further fuelling infrastructure development.”

He said, New city centres and upgraded existing town centres would emerge as destinations where consumers would spend time with their families. This would have a multiplier effect on job creation and revenues. He said retail is an occupation available to the relatively unskilled. Therefore for a country like India it will be a great employer.

“In countries like India, where distribution of wealth is uneven,” he said, propensity to spend will improve only with the equitable benefits of these developments. Large retail infrastructure would be followed by establishments of cold chains and packaged food industry. With 40% of farm produce in India getting wasted, creation of new age infrastructure will reduce farm wastage and create prosperity for farmers. Social developments are best when its benefits touch farming, technology and services,” He said organised retailing entails industries which touch all these sectors.

Fischel said in organised retailing, developers of malls and city centres should only lease out shops to retailers instead of outright sale .He said in case of outright sale of shops, there would be a multiple ownership in a mall, which would create problem in implementing a planned zoning system. He said a planned scheme of retail outlet is important for the success of a mall as it provides better experiences to shoppers. He said mall owners have not only to keep the retailers happy but also have to address the requirements of shoppers.

MY PERSPECTIVE

First things first. The rise of organised retail does not mean the end of traditional retail. According to "Retail in India: getting organised to drive growth", a joint report by global management consultancy A T Kearney and the Confederation of Indian Industry, the Indian retail sector is valued at $320 billion (Rs 14,40,000 crore), of which organised retail accounts for a minuscule 6 per cent (Rs 86,400 crore or Rs 864 billion).

Of course, the latter's 35 per cent growth is multiple times the 7-8 per cent forecast for the sector as a whole: which is why Kearney forecasts organised retail will cross $100 billion by 2012. Even at that level, though, it will be far behind traditional retail. Most manufacturers understand that.

"For a very long time to come, the biggest chunk of business will be from general trade. The corner shop will not disappear," says V S Sitaram, executive director, consumer care division, Dabur India. Even modern format retailers agree.

"Micro enterprise is the most adaptable retail entity in India. It will always remain relevant," points out Damodar Mall, president and CEO, foods business, Future Group.

CONCLUSION

Still, with the rise of modern retail outlets, the nature of shopping will change. While stock-up purchases (buying the month's groceries, for instance) are likely to move to the supermarkets and hypermarkets, top-ups (when you run out of, say, shampoo, in the middle of the month) will continue at local stores. That shift in buying habits has far-reaching consequences for consumer product companies.