Letter From India: From the 'subzi mandi' to the hypermarket

RETAILERS from across the world are coming to India, to use a cliche, wholesale. So much so that nostalgia is setting in for those used to shopping at Delhi’s Chandni Chowk, Kolkata’s New Market, Bangalore’s Russell Market and Mumbai’s Crawford Market.

There is already that quaint smell of old memories, mixed with the fresh smell of vegetables.

One is not even talking of the subzi mandi, the wholesale greengrocer’s market that is integral to urban and semi-urban India. But retail is not confined to fruits and vegetables. India’s cash-rich corporations, raring to go multinational wherever they can, are readying for international tie-ups to sell just about everything. Clothes, stationery, sportswear, inner and outerwear, tailored clothing, eyewear, watches, fragrance, footwear and accessories — the list is endless.

Apparel, however, remains the key revenue driver accounting for almost 80 per cent of total sales. According to industry insiders, the total apparel market in India for kids alone is around US$2.9 billion (RM10.7 billion).

The Indian retail market is estimated at between US$300 billion and $350 billion. But organised retail accounts for only US$8 billion. By 2010, it is expected to touch US$22 billion.

Eyeing this huge opportunity, domestic majors Tata, Aditya Birla and Reliance have already jumped in. For many of them, essentially traders two generations ago, retail should be refreshing.

The Wal-Mart agreement with communications major Bharti last month is expected to energise other global retailers, including French giant Carrefour and Hong Kong-based A.S. Watson and AEA Holdings, to firm up their India plans.

As in many other fields, Tata is the pioneer with the apparel retail chain "Westside". Last year, they brought in Australia’s Woolworth’s and are now turning to British Tesco for a strategic alliance to set up a chain of hypermarkets.

Setting up a shop and running it for long hours come naturally to Indians. Prince Klaus of The Netherlands, told me this in 1986: "My first glimpse of Indian enterprise was in East Africa in the 1940s, watching a family run a grocery. When the man rested, his wife or one of the children would manage. The shop closed for but a couple of hours."

He told Dutch entrepreneurs: "If you delay or do not go, others will." Today, the Dutch are here; so are many others. As the youngest male at home, it was my task to do the marketing. My cloth bag changed to a plastic one, and bicycle to scooter. Now, I motor down to the wholesale market. The shopping mall experience is but a decade old.

The retailing revolution is inevitable when India is changing quietly. Economist Ashok Gulati says that in the past two decades, consumption of vegetables has trebled in villages and doubled in towns; milk and milk product consumption have doubled in both urban and rural areas. The share of high-value foods has risen in India’s farm output from 32 to 44 per cent between 1983 and 2003.

Since retailing infrastructure must exert pressures on real estate, the phenomenon has seen a dual process. With branded players looking for quality space and high convertible footfalls, Khan Market, an upmarket shopping street in New Delhi, has become the costliest location with a 75 per cent jump, while South Extension, has recorded a jump of 111.5 per cent. Mumbai’s Linking Road too has registered a rise.

Soon, an estimated 50 million square feet of quality retail space will be available across India. Today, in Delhi, Mumbai and their suburbs, there are about 100 malls. They all mean thousands of jobs for skilled and semi-skilled youngsters.

Retailers are spreading out of the metros. Of the 700 new malls coming up, 40 per cent are in the smaller cities. Organised retailing in small-town India is growing at a staggering 50-60 per cent a year compared with 35-40 per cent in the metros. Cities like Dehradun, Vijayawada, Lucknow and Nashik will power India up the rankings soon.

But it is not going to be easy. The Left parties whose support is crucial to the government are against what they call "the backdoor entry of MNCs" and are opposing the foreign direct investment that major players are seeking.

"Expansion of the Wal-Mart chains has caused massive closure of small stores and pauperisation of poor communities even in the United States," says the Communist Party of India (Marxist).

Even without the communists’ accusations, Wal-Mart’s history is known. It entered Hong Kong in 1994 and quit the region two years later, after what some experts saw as poor choice of location and merchandise selection. It entered Indonesia in 1996, but left a year later, following the looting and torching of a store in Jakarta. Earlier this year, Wal-Mart exited Germany, where it had lost hundreds of millions of dollars since 1998, and South Korea.

The government is playing safe, adhering to permissible investment limits. Commerce and Industry Minister Kamal Nath wants to see whether farmers stand to benefit and what impact it could have on local neighbourhood stores.

When the malls spring up across India, and people take the Metro to buy green vegetables, a generation will pass clutching memories of mom-and-pop shops, home-made cloth bags, sustained haggling in open bazaars and the quiet thrill of getting an extra dash of chilly or coriander for free.

But I have no doubt that the small shopkeeper will survive. What will keep him going, I presume, will be the ability to make available that "something" the big retailers will have discarded for being either uneconomic or too cumbersome to handle. There will always be homegrown wisdom that will have escaped the PhDs of the Ivy League business and marketing schools.

If nothing works, the good old greengrocer will sit back and enjoy if he is lucky to get compensation, or with credit easily available, will move on to something more lucrative. Their sons and daughters, I am sure, will find something more productive to do in India’s booming economy.

Decades from now, the roadside vendor may be part of a movie or TV sequence or a character in a novel, to be read in electronic books, downloaded in airport kiosks.

Source : New Straits Times