You are on page 1of 3

FDI IN RETAILING ABSTRACT

The Indian Consumer is significantly under-served and there is room for many players." - Michael Duke, CEO, Wal-Mart The center of economic gravity in the world today is shifting to the east, towards Eastern Europe and Asia. The Asian market spanning three time zones covers over 40% of the world's population and over 20% of the global GDP. In a growing market such as India, and as the retail pie continues to expand on the back of rising incomes and increasing consumer expanding, there is room for everyone - like the global retail giant Wal-Mart and small players like Adani or Subhiksha. The time to shift gears and accelerate the pace of retail development in India has arrived. It is now up to the Government, retailers and potential investors to make this happen. Plenty has been said - and an awful lot written - about mom-and-pop shops shutting down and taking with them the friendly, smiling, simple shop assistants who apparently define a part of our culture. That's what, with different details, America's "liberal" and anti-free trade conservatives say about outsourcing to India. Do the Swadeshi Jagran Manch and its politically correct counterparts oppose outsourcing because the West is experiencing an economic-cultural hollowing out? So, hypocrisy is the first feature of those who oppose retail FDI; the second is history, or rather a lack of it. Over space and time, economic progress has involved job losses, job displacement, old skills dying out and new markets for new skills appearing. The transition is almost never seamless and is, therefore, almost always painful for some. But if that were the argument for stopping economic change, we would all still be tilling fields. The renowned Victorian Poet Tennyson said well when he talked about change in the society Old orders changeth yielding place to new, So that one good custom may not corrupt the world. Even fifty years after Independence, policy makers continue to be xenophobic. Fears of foreign imperialism have not yet receded and continue to be a barrier for the entry of foreign enterprises. Since 1991, a number of breakthroughs were made in liberalizing the policies for foreign investment; every policy decision has been influenced by foreign imperialism. Even as the government continues to delay the decision to allow FDI in multi-product retail chains, the fast-emerging Indian retail sector is becoming widely recognized amongst domestic entrepreneurs and investors as one of the biggest opportunities in India. Apart from existing players like Pantaloon, Adani, Subhiksha, etc., Reliance, Tata and Birla have announced their intention to cumulatively invest $ 10 Billion over the next five years.

In addition, various foreign players like Wal-Mart are entering the market via a joint venture with Bharti. Morgan Stanely Research shows that India's organized retail market is likely to grow from the current $ 4 Billion (2.1% of total relevant consumer spending) to 64 Billion (10.8%) by FY 2015.

Source: CEIC, CSO, A C Nielsen, Morgan Stanley Research; E = Morgan Stanley Research Estimates Competitive markets heightened customer expectation. Supply chain complexity, globalization and an evolving technology scenario are some of the challenges faced by the Indian retail industry today. Retail is a multi-faceted industry serving market segments carrying diverse business needs and service requirements. Forces of globalization, consolidation and customization have significantly changed the traditional retail model. Retailers today are seriously analyzing these multiple challenges while trying to increase sales and achieve profit targets. With retail trade expected to grow at a robust pace in the coming years, could FDI be an effective instrument to fight the obstacles of Globalization, Consolidation and Customization? The answer perhaps, 'yes'. Retail chains are increasingly relying on private labels to catch the gaps in their productmix and targeting specific needs of consumers. Pantaloons, Westside, Ebony and Shoppers' Stop are all increasing their range of private labels to improve their profit margins as well as increase average bill-size. According to Govind Shrikhande, CEO of

Shoppers' Stop, "Today, the offering of private labels is not about price. The private label brands are filling the missing gap in terms of both range and quality. Private labels are more about targeting specific merchandise for youth and mature customers." Categories such as women's luggage, accessories, corporate clothing, gym and yoga wear, etc., are some of the segments that retailers are targeting. While retailers are still pricing their private labels at a lower level, the emphasis is no longer on saving costs but on developing a specialized portfolio. Key words 01. Global value chain 02. Kiosk Marketing 03. Retail Revolution 04. Kirana Stores 05. Hyper Markets Author - Dr.M.Ashok Kumar, Associate Professor, Sree NarayanaGuru College, KG Chavadi, Coimbatore 641 105 Email: mashk21@yahoo.co.in Co-Author M.Saravanan, Assistant Professor, Sree NarayanaGuru College, KG Chavadi, Coimbatore 641 105 Email: shravan.murugan@gmail.com