The Rush for Retail

If you are one of those who follow business news closely, you would have realized by now that the most happening thing in India at the moment is Retail. Almost everyone, quite literally, has evinced interest in the booming Indian retailing industry and feel that organised retail is the way forward for future.

To mention a few: Reliance group has extensive plans to enter the Retail industry in a big way. The Tatas are also underway. Existing players like Pantaloon (with their Big Bazaar brand) etc are firming up for the stiff competition by having their own expansion plans. But the one that takes the cake is the alliance of Sunil Mittal's Bharti with the global retail giant Wal-Mart. This move is said to be a masterstroke from Sunil Mittal.

But, why is everyone so interested in Indian retail? The answer seems pretty simple. Indian retail market is worth a mammoth 350 billion dollars. But only a paltry 20% of this is organised retail. The rest of the market is still with the small and medium roadside vendors. Herein lies the opportunity for growth. If anyone can capture even 5% of this market share, he will be having a 14-15 billion dollar Mcap. It is this money that is luring the whos-who of world retail to India.

However exciting these big numbers may seem, organised retail has its own set of problems. Firstly, crores of Indian families have small roadside shops and that is their bread and butter. Now with the big players planning to have so much coverage, these small players will be virtually wiped out from the scene. For the time being, this may be the case for only the vendors in big metros. But with the kind of money that is set to flow in, organised retail will soon enter small towns as well. What will happen to these vendors? People who had lived respectably till now by doing fairly good business, may be forced to do menial jobs for a living. Can the government do something to help these small shopkeepers? We need to wait and watch; However, at the moment, the future seems bleak.

There exists another not so obvious, but an equally dangerous problem. The retail segment is the last part in the customer supply chain. By this, I mean, it is the retail sector which is in direct contact with the customer. Therefore, anybody who is a major player in the retail industry will have the potential to control the country's economy. Now, the critical question arises-- Should we allow a foreign player to control our country's Last Mile, as it is referred to? This is a sensitive issue which needs to be addressed with due diligence.

Hence, organised retail, seemingly attractive at the first glance has more than its share of problems. We would be better off in solving them before the retail boom kicks in.