Business   

The ever expanding retailing sector

— FILE PHOTO

ONE-STOP-SHOP: A view of f More retail store.

The Mahindra group may be the latest to express an intent to get into the ballooning retail sector, trying to get a slice of the rapidly expanding market, especially the lifestyle segment. The group’s desire to enter this sector comes in the wake of an already crowded field, where both multinationals and corporate giants are trying to cater to a rapidly rising middle-class and affluent sections.

When the Central Government began to liberalise the retail sector, multinational corporations and global brands (especially in textiles and garments) swiftly moved in to capture a new market. The global brands, which were available only to the globetrotters or business travellers, or routed through the parallel market, were now available at several shopping malls and showrooms in many of the major cities and towns.

Realising the potential in the retail segment, which was confined to the supermarket chains in the past, a host of Indian companies decided to enter the segment. After the advent of Marks and Spencer, followed by a large number of brand names, Indian giants such as Reliance, the Tatas, and the Aditya Birla group decided to try their hand in retailing. There was a mild storm when the Bharti group announced a tie-up with the famous Walmart chain to enter wholesale retailing in the country.

The dust may not have settled in this controversy, but Bharti chief Sunil Mittal remains committed to launching his retail chain by March 2008, and to get Walmart into the country by the third quarter of the year.

While many of them have already launched operations across the country, they are also coming up with ambitious plans for the future.

Reliance Retail has specialised in virtually every segment of retail business — from books and music to fresh vegetables and groceries. It plans to open about 2,000 stores by 2011.

The Tata-Trent vehicle came up with the Star Bazaar, and this has been followed by several other bazaars and one-stop-shops. From exquisite watches and jewellery, to home décor, and jeans, a whole range of articles is now available in these shopping centres.

Retailing has reached a certain degree of specialisation in that chains of wellness shops, healthcare outlets and centres for lighting, furniture, and even crystals have come up at various places. And names such as Gautier, Fortis, and Swarovski are associated with them. In addition to the import and retailing of branded goods, the Centre has liberalised the foreign direct investment (FDI) rules in the retail sector. This may be particularly relevant to the electronics, stationery and sports goods.

These plans and expansion of the branded markets have, of course, raised an uproar in many States, especially among political parties, besides local manufacturers, artisans, retail traders and non-Government organisations. They have all raised banners of protests against what they describe as “large scale invasion of foreign brands and multinationals” into the retail sector, which not only provides millions of local jobs, but also sustains lakhs of small traders. Their fears relate mainly to two major concerns: One elimination of the existing small trader network and two introduction of contract farming or production that could also result in drastic reduction in the prices paid to the primary producer such as the farmer.

Mr. Sunil Mittal has taken the stand that the expanding retail sector can take both the existing network and the new high-end chains. His argument is that the chains of retails outlets, format shops, supermarkets, and hypermarkets can certainly generate more employment in the local areas. The retail segment now has a trade of about $300 billion and this could climb to $500 billion in three years.

The organised retail business, or the high-end market, could account for just about $100 billion, which meant that the bulk of the market would remain with the private retailers still in business.

But the traders argue that they will have to compete both for the produce as well as the market. Customers could prefer the well-displayed, stocked, and packaged products sold in those chains to their own premises.

At least initially, they say the chains may offer the producer a better price and the customer a more competitive price just to capture the market. So, some of them are launching special drives for customer loyalty and going in for telephonic orders, door delivery, and one-month credit too, as the competition hots up.

V. JAYANTH

Printer friendly page  
Send this article to Friends by E-Mail

Stories in this Section

What is in store for markets in 2008
Multilateral trade: delivering on promises financial scene
The ever expanding retailing sector
Interest income from deposits
Sinopec to take stakes in parent’s oil refineries
Brigade Enterprises, eClerx listing today
BSLI registers 203 per cent growth
Steps to boost coconut production

Copyright © 2007, The Hindu. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu