I have seen the Retail industry from close quarters since 2002, initially as a student of NIFT and then through my professional association. I have also witnessed and participated in the discussions happening in the industry as well in our simple households.” Should Foreign Direct Investment (FDI) be allowed or should it not be permitted”
Before going in the background details would like to share that finally Government is considering allowing FOREIGN DIRECT INVESTMENT ( FDI) in multibrand retail channel, obviously in a phased manner. To start with FDI could be restricted to around 30-35 cities, all with population greater than 10 mn, that makes an interesting list. I assume apart from top Metros towns like Chandigarh, Lucknow, Jaipur, Pune,Coimbatore,Kanpur, Indore, Kochi should be in the list. Definitely makes for yet intersting phase in the Indian Economy. Currently India allows 100% FDI in Cash & Carry formats and 51% FDI in Single Brand Retail.
The biggest point of debate/protest in the past was that the popular Kirana Stores or erstwhile Mom & Pop stores would be affected by large retailers and could result in loss of livelihood of millions, but i feel with advent of Large retailers the retail industry got a face lift. Pantaloons, Big Bazaar, Shoppers Stop, Spencers and others helped change the consumer taste’s and requirements. Demand for consumption has grown manifold and consumers have larger appetite, which helps the GDP of the country. Similarly with 100% FDI i forsee some prominent international brands making a foray in India. This could be in Apparels, Jewellery,Consumer goods, foods etc and would definietly increase the consumers appetite. Its a matter to see that would the foreign retailers like to start from Tier 1 & Tier 2 towns or would they like to go deeper to all the allowed 35 towns.
One thing is for sure,if FDI opens up soon there would again be a mad rise in Real Estate rates and there would a surreal buzz in the market. I dont see the new retailers affecting the Kirana Shops-who have upped the ante and increased their service levels manifold.
Eagerly awaiting official confirmation on the same.
Credits :
www.dnaindia.com/money; www.indiaretilnews.com
Considering the demand, these retail chain will not effect the kirana stores immediately. However, in a long run as these retail chains are providing the customer a vide range of product choices , a single experience of a customer (Tier II cities) in these retail chains will gradually grab these kirana stores. Customer are getting the product in less prices from the kirana stores, they have choice to feel , select and experience the different product. One of the best example is Gurgaon where kirana store is used only for daily bread & bread type of thing.