BackStir against organized retail set to go national
Stir against organized retail set to go national
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Mumbai: Wal-Mart Stores Inc., the world’s largest listed retailer, has just announced its India plans. Unorganized retailers across India will mark that and the entry of other large retailers on Thursday by burning effigies of the CEOs of Wal-Mart and others, closing some wholesale markets and shops and holding demonstrations in the first wave of nationwide protest against them.
The protests, asking large firms to “Quit Retail," in India’s 60th year of Independence, in a twist on the famous “Quit India" slogan that Indians used to end British rule, also coincides with the anniversary of that movement. It will bring together an eclectic group of small retailers, hawkers, farmers, wholesalers and trade union activists.
The campaign, which will include rallies in Delhi, Mumbai, Bangalore, Kozhikode, Kolkata and Ranchi, among other cities, has seven demands. These include asking the government to ban the entry of large firms in retail, cancelling permission for cash-and-carry stores, implementing a policy to protect hawkers and reviewing amendments allowing companies to procure directly from farmers at cheaper rates.
While India’s $300 billion (more than Rs12 trillion) retail industry is the country’s second largest employer after agriculture, most of these jobs are in small, family-owned stores. Just 3% of the industry is organized, according to some estimates. But with organized retail growing at around 40% a year, large players such as Wal-Mart (in association with Bharti Enterprises Ltd), Reliance Industries Ltd (RIL) and the Aditya Birla Group have jumped into the fray and announced plans to enter or are already rolling out in urban markets.
“If small retailers have a right to exist, why not large retailers?" asks Arvind Singhal, chairman, Technopak, a management consulting company, responding to the Quit Retail campaign.
Hemant Kalbag, who heads the retail practice at AT Kearney, a management consulting company, says: “Some of this short-term reaction stems from fear. Eventually, both will co-exist as organized retail will expand the market."
But Mahesh Kambli, chief executive of Apna Bazaar, a Mumbai-based cooperative store chain, says organized retail endangers 12 million livelihoods of small retailers.
“If this is such a big market, why are we seeing prices dro-pping so much? The truth is that there is a fixed set of people with money to spend and these are the people moving to organized retail," he says.
A study by the FDI Watch Campaign, which opposes foreign direct investment in retail, found that small retailers around organized retail stores in Mumbai had seen sales drop to half in the last year or so. An earlier study by Anuradha Kalhan, a Mumbai University professor, had found that 71% of small retailers surveyed, who were located within a kilometre of an organized retail store, had seen a drop in sales.
The protests will bring together demonstrations that have been isolated so far. In Karnataka, the Agriculture Produce Market Committee has been on strike since 1 August, protesting against a state amendment allowing contract farming and direct procurement of produce by retailers. In Ranchi, the demonstrations are being organized by activists who were arrested for violence at a Reliance Fresh store, the neighbourhood outlet run by RIL, India’s largest diversified group.
Uday Shankar Ojha, who spent two months leading the May protests and is the convenor of the Ranchi Zilla Phal Sabzi Vikreta Sangh, says “more than 50,000 small hawkers and retailers will be affected by the entry of Reliance. The worst affected will be women who sell a basketful of fruit and vegetables door to door every day." Ojha says Ranchi’s protests are a “role model for the country."
These protests have reached a flashpoint as the international anti-Wal-Mart campaign entered India along with the retail giant.
“We will fight Wal-Mart and anybody who follows its model. Wal-Mart is the poster-boy of monopoly retail across the world," says Wade Rathke, founder of ACORN, which as been opposing Wal-Mart internationally.
Large retailers have faced protests overseas with several nations enacting legislation to protect small retailers. While large retail cannot open within 15km of city centres in Thailand, international retailers have to source a fixed amount of stock locally in the Philippines and have partners in Malaysia. The Indian government has also commissioned a study on the impact of organized retail on small shops and businesses so it can formulate its policy, picking up on the concern voiced by the small groups of protesters.
“The day Reliance and Wal-Mart come here, we will start continuous protests and even harm their stores," says Sudip Moitra, organising secretary of the Kolkata Hawkers Sangram Committee, which shut down a store by Spencer’s, which is a hypermarket chain from the RPG Group.
But retailers are unfazed. “There is no regulation stopping kiranas (local shops) from modernising," said Andrew Levermore, chief executive of Hypercity, the hypermarket chain of Shopper’s Stop Ltd. “Ultimately, the people will decide."
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