Why India may not be such an attractive destination for supermarkets

[Bang Galore]

...thats why from US secretary of state to US president were pressuring India to open up the retail sector, US secretary of state Hillary Clinton even made a visit to Kolkata to convince Ms. Mamata Banerjee to get rid of her opposition to the FDI in retail & inturn making a plea for the Walmart (a company of which Ms. Clinton was once part of the board of directors, for complete 6 years).

That's their job. Just like the Indian government reacts to visa restrictions or protectionism w.r.t. Indian companies, the Americans do for their own. Nothing out of the ordinary here.

 

[Bang Galore]

The German giant METRO has been in Bangalore for many years now & does roaring business even though they still don't do direct retailing. The benefits of such a company have been most felt by the very same Mom & Pop stores that everyone hides behind when they oppose FDI. METRO's biggest customers are the smaller kirana stores & the hotels & restaurants. The excuses against FDI are for political reasons and have no real economic basis.

 

[Roybot]

Actually the article covers many aspects which are ignored by people who blindly support FDI in retail sector. The challenges may be faced by "mom and pop" stores have been discussed but many people don't know the challenges these stores will face. Article shed some light on other part of this story not much discussed.

Loyalty of Indian customers to local stores, credit on basis of strong relation that increases every day while the same is not the case with credit cards and Banks. In my home town, I have always bought things from one particular shop for at least a decade and that shopkeeper is part of our friend circle.

Another aspect was to control the effect of these retail giants on local shops which can be taken from other countries like Germany which has implemented certain rules to avoid dependency of economy on these retail giants. If strict rules are made, not many foreign retailers will take the risk, only those who can survive low profitability or loss for few years until people start to buy goods from there.

We should let the retail companies worry about those things. These companies are going to invest billions, rest assured that they have done their homework, and they don't need BBC to tell them whether it will be a good idea or not.

 

[KRAIT]

It all depends on many factors especially the govt. policies to regulate them keeping domestic concerns in mind and acceptance/switching rate of Indian populace to these retailers. I already said the initial losses won't matter to relatively bigger companies like Walmart, they may artificially create loss just to kick out or reduce the market share of domestic retailers like Big Bazaar, Rs 6000 crore turnover is worth taking risk amount for multi billion dollar companies like Walmart. .

If you want to understand the entire picture, other angles should be used to analyze it. Its not that simple.

Pros and Cons, the long lasting impact of such chains should also be considered. Once you get habitual of them, there is no turning back as other competitors can't match the level of these Multi-national chains. Its not just about the stores but also the logistics, transport, infrastructure, employment generated etc. that has to be considered too. Increasing effects on our economy by these companies have to be studied for short and long term.

We have seen change of policies by change of govt., sometimes complete reversal, policy paralysis that happened in case of UPA-II etc. If new stricter policies are introduced after their investment and makes thing worse for them, they will pull out, like many companies did in the past, creating a void, affecting supply according to demand, inflation and unemployment.

These companies have their own emergency plans to minimize their losses and they have been doing their homework regarding pulling out their investment for many years. Can our country cope up with billions of FDI going away in this case.

There is always two side of the story. Its better to be cautious rather than being sorry as we may see majority of entire retail sector in hands of few companies which can use according t their need.

 

[Solidarity]

Oh for God sake! No disrespect but i totally agree that India is not such an attractive destination and there is a reason for that. India is like a big fuss wrapped in marketing campaigns that glorifies its large population, multicultures, multi ethnic society which is in fact a major issue faced by them. People go to India with lot of high hopes but when they reach there, they are disappointed. I think if they stop branding India as a marketing tool to gain tourism and exports to other markets, people will come to realize that India can offer more then what is being imagined by the world. But only if they stop promoting India like some product they are trying to sell. Both India and Pakistan along with its neighboring countries should focus on their core issues. Issues like Health, Education and safe environment for all pupils should be its priority.

Basically, people who are healthy and are less exposed to threats have far better chances to educate themselves and give back to society. This is the right way to go about it and once we achieve this. South Asia as a whole will strengthen and get benefit.

 

[harpoon]

Oh for God sake! No disrespect but i totally agree that India is not such an attractive destination and there is a reason for that. India is like a big fuss wrapped in marketing campaigns that glorifies its large population, multicultures, multi ethnic society which is in fact a major issue faced by them. People go to India with lot of high hopes but when they reach there, they are disappointed.

You Sir are a genius. You can see what multi billion dollar MNCs with their multi million dollar research teams cannot see.Quick..to the office of IKEA and Coca Cola. They are both on the verge of spending 5 billion dollars each on India.

I think if they stop branding India as a marketing tool to gain tourism and exports to other markets, people will come to realize that India can offer more then what is being imagined by the world. But only if they stop promoting India like some product they are trying to sell.

Why shouldn't we? Infact the chap who came with the Incredible India (with an inverted i) should be given some padma bhooshan or something. People which also includes Pakistanis now cannot think incredible without thinking India which brought in 5 million tourists last year.

Both India and Pakistan along with its neighboring countries should focus on their core issues. Issues like Health, Education and safe environment for all pupils should be its priority.

Basically, people who are healthy and are less exposed to threats have far better chances to educate themselves and give back to society. This is the right way to go about it and once we achieve this. South Asia as a whole will strengthen and get benefit.

The money for all this will not fall out of the sky.

 

[IndoCarib]

We have had our own home grown retail giants for so many years. They have not only survived but grown by leaps and bounds. India’s retail industry is estimated to be worth approximately US$ 400 billion and is still growing, expected to reach US$ 800 billion in 2015. The foreign players will jump in to grab a share of the pie and create jobs for us in return. People who say India is not attractive destination for foreign players doesn't know anything about retail industry.

 

[Trisonics]

The article makes an assumption that Walmart and the likes have not done their research. If everything in the article is true there would be no Walmart in India. They see a market and will make their investment. The Market in India is constantly changing and proof of that is the number of malls even in tier two and three cities. Metros now boast of at least 2-3 Malls in every area. Even richer pop and mom stores now copy the aile and rack presentation with shopping carts. I'm surprised the pics did not have a cow grazing on the grass popped between the tiles on the side walk. After all that is what they like to believe.

 

[Abu Zolfiqar]

the real issue for those big brands (e.g. Walmart) is india's tendency to resort to protectionism and other barriers to entry. It goes back to their old socialism mentality - though perhaps newer generations have moved on from that.

what india has is a large population; so the domestic consumption alone helps to drive their economy

as a big market, these large supermarket chains have a lot of reason to look towards india -- but corruption and red tape and other measures (e.g. protectionist measures) can make it difficult to operate there

given also that india didnt really open up its economy until 1990s, the notion of globalization (Walmart being a main symbol of it) has been met often with skepticism and contempt by the old fashion type thinkers -- who prefer the mom-and-pops stores and know that large chains like these will drive a lot of people out of business b/c they cant compete

 

[SpArK]

nice read... but fact is that retail shares have been booming since the FDI was announced..

Almost all local retail shares like Pantaloon, store one, koutons, V2, cantabil, valuemart etc have started to climb the charts again.

news just in:

Aviation, retail shares likely to attract more demand: Experts - The Economic Times

Retail FDI can bring in $2.5-3 billion into India by 2017 - The Times of India

FDI in retail likely to spur deal activity in agriculture, logistics

FDI in retail likely to spur deal activity in agriculture, logistics

Any stock market guys out there its time to accumulate Pantaloon and value mart shares to minimum of 5% up in a month..

-Free Sparktip.

 

[Windjammer]

We heard all the tall talk after this exposure as well.

BBC News - India's Commonwealth Games bills still not paid

 

[MilSpec]

We heard all the tall talk after this exposure as well.

BBC News - India's Commonwealth Games bills still not paid

How is that related to Supermarket fdi's?

 

[Windjammer]

How is that related to Supermarket fdi's?

My dear the answer lies within the article.

Many foreign companies see entry into India's booming market as one way of riding out the global financial storm, but Mark Dummett in Delhi says doing business there is not for the faint-hearted.

 

[samr23]

Loll Pakistani comments are hilarious, bringing corruption, redtape and bullcrap into something that has nothing to do with it.
First of all by allowing FDI cap to 51%, now foreign companies will take massinve expansion in India and they will have to partner Indian companies like Bharti, Reliance, Sahara, Big BaZar and other supermaket Indian chains. There is no one stopping them now, they can open as many stores and expand as much as they want. Where does corruption come into this??

There Ikea, Walmart, Fresh Co, are not some rag tag companies originating from a third world, backward countries like Pakistan and Somalia. They are the biggest and best in world, both in quality and market capitalisation.

Corruption in Indian happens when either there is govt involved or there is a middle men who take away a part of the deal. In this industry both of them have been eliminated. There is no bidding or contracts. 2G was awarded by Telecom dept of India, coalgate happened by goi, so was the Isro scam.

Has anyone ever heard corruption in Indian auto sector??? Loll Pakistanis make a joke on themselves everytime.

My dear the answer lies within the article.

Whats wrong in the line. Bhai aapke country mein koi 1$ invest to karta nahi. Here if we open a sector, the line of investors is huge. What the guy meant that by investing in India they can make more profits.

 

[joekrish]

My dear the answer lies within the article.

Sorry, I dint see any relation about the CWG bills and the article. Yes doing business in India is not for the fain-hearted that is because most of the consumers are demanding and know their products well.