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Business News/ Companies / Organized retail hurting small traders in Hyderabad: study
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Organized retail hurting small traders in Hyderabad: study

Organized retail hurting small traders in Hyderabad: study

Uncertain future: Some hawkers say they can no longer sell in areas close to supermarket stores.Premium

Uncertain future: Some hawkers say they can no longer sell in areas close to supermarket stores.

Organized retail has brought down prices for consumers but it is also edging hawkers and traders out of business in Hyderabad, one of the top markets for such retail, according to a new study on the impact of the growing presence of supermarkets and hypermarts on the city’s small shopkeepers, by a private firm.

“Hyderabad is the mother market for supermarkets," Harish Bijoor, chief executive of Harish Bijoor Consults Inc., the firm that conducted the study, said. “We have the oldest evolution patterns for supermarkets there. It is such a retail-intensive place that everyone’s eyes are on the Hyderabad market."

The recently completed study was conducted over a period of eight months for a client in the retail business whom Bijoor would not name. It included interviews with a range of respondents across 221 villages around Hyderabad. Bijoor would also notreveal the number of people surveyed or the sampling error of the study.

The study is among the first research to evaluate the impact of organized retail on unorganized retailers. The Union government has commissioned New Delhi-based think tank Indian Council for Research on International Economic Relations to study the impact of organized retail on small retailers but the results of this study have not yet been released.

Uncertain future: Some hawkers say they can no longer sell in areas close to supermarket stores.

However, the real fallout has been on small hawkers and pushcart vendors. With people shifting their shopping to organized retail stores, sales at pushcarts have plunged 37% in terms of volume, and with prices dropping at chain stores, sales in value terms have dropped as much as 59%. The maximum distress was seen among Hyderabad’s more than 6,500 hawkers, who reported a 35-40% fall in income, according to the study.

Some hawkers interviewed for the study said they can no longer sell in areas close to supermarket stores. They said they now buy from a chain store in the morning and then go to a locality far away from it to sell their produce. Some hawkers reported that their incomes had fallen to Rs3,500 a month, from Rs12,000 a month over the last two years.

Organized retailers have managed to cut prices through disintermediation, or making intermediaries irrelevant, the study said. It found that fruit passes through as many as six intermediaries, while groceries go through two-three middle men. Organized retailers procure directly from farmers or from wholesale markets.

But cutting these layers has endangered the livelihoods of the more than 28,300 middle men in the Hyderabad market, said the study. Some of these people have been traders for generations and are now scrambling to find new jobs, the study added.

Analysts say it is hard to say if the trends seen in the study would be replicated across cities. “Hyderabad has been a test base for retailers because it has been open and early adaptor of organized retail," Hemant Kalbag, who heads the retail practice at AT Kearney, a management consulting company, said. “While a new shop can take business from an existing one, it may also expand the market."

Activists in Hyderabad say small traders are the losers. “The market is shifting as people here tend to buy more from malls and these new shops," said Girish Sanghi, a member of Parliament from the Rajya Sabha from Andhra Pradesh, who has been agitating on behalf of small traders. “So many small traders who formed the supply chain now find their livelihoods in jeopardy."

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Published: 21 Nov 2007, 12:36 AM IST
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