The scientific survey, which can be extrapolated to most of urban India, looked at four top cities—Kolkata, Ahmedabad, Hyderabad and New Delhi—and initially surveyed about 800 small retailers. Midway through the project, at the behest of other researchers, including Thomas Reardon, a well-regarded professor for agricultural economics at Michigan State University, the survey added some 800 more small retailers in the same cities, but from areas that were yet to be directly impacted by branded retail. This was done to make the survey more robust and give the government a valid survey of retailers for not only a “before and after” comparison, but also to isolate any normal declines in sales or profits that might have been unrelated to organized retail’s entry into the area. The survey also made sure that demographics and socio-economic parameters of areas in which both samples were collected were identical.
Repeated calls by Mint in the past week to Rajiv Kumar, director and chief executive of Icrier, were not returned. However, when Kumar was asked by a Mint reporter at a seminar, he declined to discuss the actual numbers of the survey. He said he has to give the report to the government before making it public.
One senior bureaucrat, who has been involved in the survey exercise, told Mint that the commerce ministry was aware that sales at small retailers had fallen 10% on an annualized basis, according to the initial report produced a few months ago, but that the ministry was awaiting the final report that includes the “control” sample data. He expected the current report to be given to them in January.
The bureaucrat, who didn’t want to be identified given the extremely political nature of the retail debate, also said there were significant divisions within the government’s political decision makers over the retail policy and added that he didn’t expect the current retail policy to change significantly irrespective of what the final study results conclude.
Indeed, many major Indian as well as foreign retailers appear to be banking on the government’s policy not changing radically anytime soon.
Wal-Mart, the world’s biggest retailer by sales, has a joint venture with Bharti Enterprises, which will open stores that sell goods only to bulk buyers who purchase for business needs. It will also help Bharti manage the logistics and supply chain for the Indian firm’s retail stores. And Carrefour SA, the world’s second largest retailer, is in active talks to license its brand for retail in India.
Under existing Indian laws, 100% foreign direct ownership is barred in retail stores that sell multiple brands to individual customers.
Not that there isn’t enough interest in the sector from local players. Reliance will open at least 1,500 grocery stores by 2011; another company, Subhiksha Trading Services Ltd, which opened its first store a decade ago, has crossed the 1,000-store mark and thrives on selling products at a deep discount. Reliance alone has plans to spend up to Rs25,000 crore for its retail venture—which will include grocery and speciality stores and hypermarkets in 6,000 towns and around 700 cities nationwide—making it the most ambitious plan in retailing in India announced so far.