Opinion - News Analysis   

A case to regulate the booming retail city

A. Srivathsan

Indian cities that are eagerly embracing large-format retailing appear clueless about the conflicts such retailing could trigger.

IN DECEMBER 2001, Nopporn, a 48-year-old graduate, killed himself after the police surrounded him in a Bangkok suburb. He was not a criminal, but one who was upset with the proliferation of large retail stores in Thailand. His anger was directed at a U.K. retail giant. He fired shots at a Tesco store and later killed himself. Resistance of this kind in Thailand compelled Thaksin Shinawatra, the then Prime Minister, to promulgate an ordinance to regulate large retail stores. Today, such stores that are 10,000 square feet or more in area have to be built 15 km away from the town centre. This, it is hoped, will protect the small retailers who trade within the city limits.

This was no isolated incident, nor was it to be dismissed as a knee-jerk reaction bordering on the irrational. It was not another meaningless act of resistance to things perceived to be from the West. It is about conflicts and adjustments cities and people have to make when certain forms of development are introduced abruptly. In this case, it indicates what will happen when large-format retailing is introduced without proper regulation.

Not just Thailand, many other countries have understood the problems inherent in large-format retailing. There are now elaborate methods to evaluate its impact. Based on this, specific location criteria are in place to mitigate the negative impact. Viewed against this, Indian cities that are eagerly embracing large-format retailing appear clueless about the conflicts such retailing could trigger.

A joint report by McKinsey and the Confederation of Indian Industry estimates the Indian retail market to be worth about $180 billion and predicts it will reach $300 billion by 2010. Another CII report projects that 15-20 per cent of this will be accounted for by organised retailing by 2010. It also suggests that organised retailing must become a national phenomenon in order to realise the market potential. In other words, it is arguing for extensive growth of new formats of retailing such as malls and hypermarkets.

The debate so far has been about how foreign direct investment in the retail trade will affect small traders. What has not been discussed is the impact of large-scale retailing on the environment and on city life. And the regulations needed to mitigate this negative impact.

Large-format retailing involves hypermarkets, super stores, and malls. A hypermarket or a big-box store combines a supermarket and a department store under one roof. A study by the Institute of Self Reliance, a non-profit organisation in the United States, estimates that these large stores range in area from 180,000 sq ft to 250,000 sq feet, or between 4.1 acres and 5.7 acres. They require parking for approximately 1,000 cars. Put together, hypermarkets need a plot as large as 10 acres.

When such developments are located within densely developed cities they add to traffic woes. Infrastructure in cities is, and always has been, inadequate. Studies also show that it affects the business of small retailers on the streets and in commercial districts.

Many countries have come up with specific planning regulations for hypermarkets. In France, apart from land-use plan, the location of supermarkets and hypermarkets are regulated through a set of strict rules. Stores that exceed 60,000 sq ft are subjected to a public inquiry. A report on the project's effect on the local urban and economic environment, traffic, road access, and parking is discussed. Only projects that pass this rigorous assessment are given a licence.

In Germany, projects that exceed 12,000 sq ft will find it difficult to get a licence. Any retail centre that exceeds 12,000 sq ft is presumed to create adverse impact and it is the onus of the developer to prove it to be otherwise. All projects exceeding 50,000 sq ft in area require a mandatory environmental impact assessment irrespective of the location. These procedures tend to delay the approval and sanctioning of projects by years and increase the development cost manifold. At the core of these elaborate procedures is a concern to impose social and environmental responsibility on the stores.

In Malaysia, hypermarkets cannot be built within 3.5 km of housing estates or a city centre. And, only one hypermarket is allowed for a population of 350,000. At the moment, no new hypermarkets are permitted till January 2008. Indonesia prohibits hypermarkets with a floor area of 2,000 sq ft from coming up within 500 metres of traditional markets. Hypermarkets with a floor size of more than 40,000 sq ft should be located at least 2.5 km from a traditional market. Regulations also stipulate that between 10 per cent and 20 per cent of a hypermarket building must be allocated for traditional or informal businesses.

Compare this with the Indian situation. According to the International Council of Shopping Centres, an international trade association of the shopping centre industry, by 2007 India will have 55.7 million sq ft of mall space. In addition there will be hypermarkets. Indian cities do not seem to have learnt from the experience elsewhere and do not seem to have any plan to regulate the impending development.

City master plans in India make no distinction between a convenience store and a mall. They are treated as the same. They do not make any separate demand on the large stores either in parking terms or impact assessment. On the contrary, cities the world over have a more detailed classificatory system for shops. Land-use plans and building rules make these distinctions and specify separate rules for each of them.

There is no regulation that is binding on big stores in Indian cities. They can come up even in the middle of a dense neighbourhood without any consideration for the traffic or the environment. The only regulating tool available is the land-use plan. And even those are outdated. For example, in Chennai, the land-use plan was prepared in 1975 and it is yet to be revised.

The hypermarkets mostly serve car-driving buyers and require vast parking lots. Parking standards in Indian cities are abysmally low. And the hypermarkets would not be required to provide large parking spaces. For example, a store with 120,000 sq ft is required to provide for only 200 to 300 cars. This is much less than the actual demand or usage on the ground. The deficient space has to be made up by parking on streets. In spite of the steep increase in the number of private vehicles, many Indian cities have not revised their parking requirements for a long time. They are ill-equipped to accommodate these large stores.

The hypermarkets are known to produce a spatial pattern that might not make up for a vibrant city life. They are a part of car-based, low-density, and vastly spread urban form. As stand-alone stores surrounded by a vast expanse of parking area, they make no gestures to streets nor add to the public realm of the city. Though malls and big stores try to imitate streets, they are not truly public spaces. They remain as passive sites of consumption.

Critiquing hypermarkets and seeking support in favour of civic life in a street is more than a simple valorisation or romanticising of things past. It is a critique of the new economy and the unsustainable levels of consumption they engender. To paraphrase Richard Sennet, the sociologist, such developments absorb activities and interests that were once played in a variety of settings in the city. It is about loss of multiple foci of small scale.

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