Whether he is a Vellaiyan of Chennai or a hero of Sulur he
cannot prevent FDI in retailing from being allowed in the country. It can only be
like the nuclear power project at Kudankulam where the opposition sent waves of
concern but the commissioning has moved ahead in full swing to operationalize the project in
due course. Similarly even if retail FDI is allowed by a limited number of States, the others are bound to follow suit soon! Otherwise customers from the State where FDI in retailing is not allowed will cross borders to buy the merchandise
multinationals might sell in the neighboring State! A big ‘Nadar Peravai’* in Chennai
repeatedly asked the question of what good is FDI in retailing going to do in
the country and I was asking those who raised that question to introspect and
see how better their posterity is going to be in the new FDI regime! As the
Nadar shopkeepers in yesteryears took to setting up shops, shunning the
bootlegging their ancestors did for decades (they thought that their earlier
generation was not in the right business!). They did not bother to grow more
Palmyrah trees nor were they inclined to draught toddy any longer. The next generation
took to trading in retail and they have been quite successful. The threat for
the Nadar retailers of Tamil Nadu is not FDI in retailing but the attitude of
their own posterity. These retailers have slogged it out right from early
morning 6 o’clock till 11 o’clock in the night, serving customers, every day.
They have known their customers like the back of their palms! Will their
children take over their business? In my opinion, the answer is a big NO! The
children may not like to take over the family business exactly like how their
own fathers had refused to take over their ancestors’ business of brewing
toddy, which gave rise to the entry of Indian Made Foreign Liquor in India!
There were no modernized techniques to climb the trees to distill toddy from
the Palmyrah trees! How many ‘Nadar Annachis’ have grown new Palmyrah trees in
the last two decades to support brewing toddy? Likewise the new generation will
try to get into newer businesses like IT & ITES and modern retailing,
without trying to take over the family business of small time retailing. One
needs to modernize the family retail business in order to make it attractive
for the younger generation to jump into.
This afternoon a friend and I took a walk in the busy
Ranganathan Street of Chennai to have a glimpse of what is happening in the
Mecca of Retailing, as they call it! As we walked into Saravana Stores, a floor
manager greeted us offering us help to take us around, guessing rightly that we
had come to take a look! The merchandise categories are so relevant to the
target customers that Saravana Stores has got the model right! A Walmart may find it next to impossible to make
a tie-up with the seven hundred ‘artisans’ and ‘karigars’ that Saravana works
with for over two decades now! The compelling sales strategies of the one
hundred varieties of sarees ranging from ‘Kushboo Cotton’ to ‘Kerala Zaris’ at
the best prices can never be organized by any retailer who comes through the
FDI route!
A Kannan Annachi who has organized to retail more than
fifteen varieties of ‘idli podis’ ‘vadhaams’ and ‘pappadams’ in each of his
store, is a unique phenomenon by himself to the retailing landscape of South India. He subtly sells a
few varieties of dry fish in a remote corner in the store, redefining and rediscovering the right adjacencies to steer clear of veg from non-veg categories! Any multinational
store may find it difficult to organize its categories specific to every store's customer preferences at all! Let the ‘Nadar retailers’ of Tamil Nadu rework their
strategies to become successful amidst competition from multinationals. Let
them welcome FDI in retailing but forge closer associations with their
customers. Let them modernize their stores in such a way that the youngsters in
their families are encouraged to take to retailing! It may be a matter of ‘sail
or sink’ for many retailers as multinationals may start spreading across the
country soon. Collaborative buying by small retailers by teaming together can
work wonders!
Goliath was big enough to be hit by the tiny David easily.
Strategies alone need to be worked out well. The sling has to work and hit the
target right on the forehead where the gap is! Domestic retailers have to think of the many
strategies that they can deploy to win over foreign retailers. If the strategies
were new and exciting, the younger generation would not mind taking over the
reigns of management of the family retail stores. Many soft drink brands in India fell by the
wayside as Pepsi and Coke started to rule the Indian beverage market because
they tried to copy and emulate the big brands. Perhaps if they had stuck to the
original 200 ml bottles, many brands like Torino, Gold Spot, Parnar, Bovonto perhaps may not have had a tough time! FDI is welcome as many members of the family
belonging to posterity may take up rewarding assignments in MNC retailing
because the incumbents may come with their traditional retail training! We are
good at what we are and let us strengthen our domestic retailing skills to win
over customers rather than trying to see if we could emulate the look and feel
of large competing retailers for no reason!
- Dr. Gibson G. Vedamani
* Nadar community in Tamil Nadu is engaged in the business of retailing largely and Nadar Peravai is an association of nadar traders in Tamil Nadu.
Sir, from your article it seems the FDI in India is a welcomed and if the native businessman stick to their basics, they can tackle the competition. But whey government hadnt allowed FDI earlier and what is the need for now and how does it impact the Indian Economy
ReplyDeleteKGD, many entities have been lobbying for FDI in retail in India for more than ten years now. From a customer point of view, we get to have the best products at the best prices as competition would increase largely. The government gets to benefit by way of increased taxation revenues as the industry will be more organized. Organized retail business as it percolates into smaller towns will help in getting more employment at the lower mid stratum of our society and there are other benefits for farmers too as organized retailers would offer them better prices for contract purchasing leading to contract farming, bye-passing middlemen. The entry of foreign retailers will also help increase domestic production of various ethnic/indigenous goods in addition to some services. There will be a huge consumption bom also. All these together will help augment and strengthen our economy.
DeleteWhy there is a lot of opposition to FDI in retailing is because there are a number of small retailers in India who fear that their business will be affected. Anyway their business is going to be affected if our own Indian organized retailers expand their operations across India. If they don't grow and organize/modernize themselves, consumers themselves will not buy from them. We all have to help them garner their strengths to fight competition rather than letting them to fear big retailers!
"Athan, India is such a vast country, where leave alone foreign retailers, Indian retailers have found it next to impossible to get the assortment right. That would be the biggest edge for the local retailers. I also have a feeling that any opposition to FDI is in a vested interest to benefit some rather than the entire "annachi" community. These people should rather spend their time and energy to evolve according to the modern customers' need rather than doing nothing but protesting. The government can not play benefactor till eternity to safeguard the interest of a few. One glaring but less mentioned benefit of FDI in retail or organized retail would be the increase in revenues to the government thru taxes and needless to mention the tough food safety standards that the organized sector follow."
ReplyDeleteYes Allen, i totally agree with you. The history of other countries like China, Japan and Thailand tells us that when big retailers expand to set up shop, farmers and customers have always benefitted. Serious retailers have reorganized themselves taking advantage of back-end and supply chain developments. Many small retailers have taken to newer value adding roles to carve a niche for themselves. Those non-value-adding middlemen manipulate our small and medium retail fraternity to front-end agitations. Well intending States can come up with protective measures for small retailers to help them co-exist with the larger ones! Where there is WILL there is a WAY!
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