At WHAT cost?
Sugar and wheat flour come cheap at the new Metro Cash & Carry outlet in the city. But along with them come an array of questions on what is and what isn't fair trade, writes GOVIND D. BELGAUMKAR
People queuing up, awaiting their turn
"We are here to stay." Heinrich O.E. Birr, President, Asia-Pacific, Metro Cash & Carry International.
"We will win this battle." C. Abraham Varghese, All India Convener, Swadeshi Jagaran Manch, and Director, Centre for Bharatiya Marketing Development, on the campaign agaistn Metro Cash & Carry.
"It is a different shopping experience. I save about 10 to 20 per cent in my business purchases." Ravi, a shopkeeper in Mattikere.
"Metro will not mind losing Rs. 200 crore a year to systematically kill the competition. But we will win ultimately." K.N. Chayapathi, Convener, Bangalore Traders Action Committee formed to fight against Metro Cash & Carry.
CHEAP! THAT'S a word that spells magic. And all roads, right now, seem to lead to Metro Cash & Carry, which is in the eye of a storm ever since it opened its first outlet at Yeshwantpur. Those who have the Metro card (which allows you to enter the premises and make purchases) are ecstatic while the "have-nots" are upset.
Also upset are the wholesale traders, who see their business being hit because of the trading practices of the international chain. But Metro Cash & Carry labels it nothing more than "efficient handling of the supply chain". It claims to save up to 30 per cent by avoiding multiple layers in the chain, and therefore, offer attractive prices for goods. Traders call it "undercutting" , meant only to kill competition.
As for the State Government, the Minister for Urban Development, D.K. Shivakumar, says the traders should face the competition head-on. After all, when Metro invested Rs. 176 crore on its two distribution centres at Yeshwantpur and Konanakunte on Kanakapura Road, it was not just the cosmopolitan outlook of Bangalore that motivated the multinational to do so. Nor was it impressed by Bangaloreans' yen to embrace anything new. What mattered most, according to Mr. Birr, was the favourable attitude of the Karnataka GovernmentMr. Shivakumar even offered to amend the Agricultural Produce Marketing Committees (APMC) Act to enable Metro to trade in agricultural produce outside the APMC yard, which is not allowed at present.
Mr. Birr went a step ahead and stated that, "in his belief", the Government was considering an ordinance to allow the MNC to trade in 100-odd goods listed in the APMC Act. This is being perceived as indicative of the MNC's ability to get Government to do its bidding. When he said that a technical problem preventing Metro to trade in goods listed in APMC Act was causing "a major concern" over investment in Bangalore, the State Government could not take it lightly.
Mr. Varghese pointing out that Metro has a net worth of Rs. 2,76,000 crore, says: "Losing a couple of crores a month for future gains is peanuts for the company."
... before wheeling away their purchases. Photos: Sampath Kumar G.P.
But buyers are thrilled. Check out the price list: refined sugar is sold at Rs. 69 as against its MRP of Rs. 78.50 for 5 kg.. Wheat flour is Rs. 64 for 5 kg. (MRP Rs. 90), Amul Cheese Rs. 139 per kg. (MRP Rs. 159), an automatic washing machine Rs. 15,490 (MRP Rs. 22,990), a trolley bag Rs. 2,999 (MRP Rs. 6,950), a branded T-shirt Rs. 299 (MRP: Rs. 490), and a laptop Rs. 59,995 (MRP Rs. 74,750). Clearly, it is not for nothing that so many are desperate for a Metro card. Varun, a second division government clerk, who came to the Yeshwantpur outlet at 6 a.m., admitted he did not own any retail business that would entitle him to the card. But he had got an appointment to come back between 9 a.m. and noon.
"I will try and get a card somehow," he told Metro Plus. Another person told the security guard he was not a businessman, and wondered if he could get a card too. "Bring along a businessman, you can get an `additional card'," he was told.
Wholesale traders say that their business has been hit by five to 10 per cent already. What's more, their customers have started questioning prices at the RMC Yard. "We get Cothas Coffee at Rs. 56 and we sell it at Rs. 58 or Rs. 59. Metro is offering it at Rs. 55! This is a clear case of undercutting," Mr. Chayapathi says.
`It's bonded labour'
M.D. NAN-JUNDASWAMY, farmers' leader and a keen observer of the developments relating to globalisation, sees the arrival of Metro Cash & Carry as a potential threat to farmers and the economy.
The Metro, he says, will soon look at contract farming. Farmers will have to grow price their produce according to the MNC's diktat. "You will have to use the geneticallymodified seeds supplied by the company. It will be a new variety of bonded labour." By opening many outlets in the country, the MNC will control a large chunk of farmers. "MNCs have money power. You will see how they will purchase our politicians and loot India. People are ready to forget the motherland if you give something at a cheap rate," says Prof. Nanjundaswamy.
INDIA'S ECONOMIC policy clearly states that there should be no foreign investment in retail market, as this could hit a large chunk of small traders adversely. About two crore families in retail segment contribute 13 per cent to our Gross Domestic Product (GDP), according to S. Gurumurthy of the New Delhi-based Swadeshi Jagaran Manch.
S. Gurumurthy: `This is feeding consumerism'
But the management of Metro Cash & Carry, which claims to be catering only to business establishments, is accused of entering the retail market through the backdoor. Many buyers revealed to Metro Plus that they made purchases for household consumption. There are examples of a fancy article shop owner buying cigarettes and a grain merchant buying a set of electronic goods. And, how do you explain a foundry owner buying beanbags?
Swadeshi Jagaran Manch says that by making it mandatory for buyers to purchase significantly big quantities (six to 10 toothpaste units at once, for example), the company is selling the habit of making big purchases needlessly. By feeding consumerism, the MNC's plan is to incapacitate the wholesale and retail traders in the chosen area, and strike it rich in due course, it charges.
`We are transparent'
METRO Cash & Carry Asia-Pacific Chief, Heinrich O.E. Birr, insists that the company is known for its transparency. But he cannot prevent the cardholders from making purchases unconnected with their business.
"A flower trader, who purchased a diamond pendant in Germany, wanted to give it to his employee. Is it not a business-related purchase?"
What the traders call undercutting is a misconception, says Harsh Bahadur, Managing Director, Metro Cash & Carry. "Sometimes, we have promotional offers. The price we offer depends on the understanding we have with the supplier." According to him, contract farming will only benefit the farmers.
"Some of us seem to think that our farmer is unintelligent. But he knows what is good for him. He can walk into a contract and get out any time."
Send this article to Friends by