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Thursday, November 29, 2012

FDI In Retail – Why We Need It As Buyers


Personally I am a huge fan of this FDI in retail thing. I have my own reasons for it and all those are very personal as well. Every time I go to our present day so called super markets, I get disenchanted. Empty shells, rotten veggies, exorbitant price, filthy and unhygienic surroundings, goods post their expiry date still stashed in the shelves (I have at least one such experience of buying an outdated AXE deodorant once. I admit it is my fault since I learned nothing after numerous ‘Jaago Grahak Jaago’ campaign of our government but believed these unethical people). I mean all that you don’t expect these renowned super markets to exhibit. To top it, little or no interest in thinking about customer comfort and a joyful shopping experience. What else can explain a tinny 5000 square feet room full with items barely leaving enough space to move around pushing your trolley?

Not only about space but the shopping comfort is in fact overlooked quite nonchalantly in everything else that you can think of; which also includes having only one or at best two checkout counters to cater hundreds of customers at any point of time. I personally find myself at the tail end of the queue every time I venture into my neighborhood Reliance-Fresh store. Did I commit a crime by shopping in this store; you will ponder since you don’t want to spend an hour to pay your bill every weekend morning. Do you?
No wonder these guys need some competition; for the sole reason to learn how retail business is carried out in professional manner, keeping everything in mind. I have stayed outside India and not to mention has gone to stores there. First thing that you note as a big difference when you enter a place like Wal-Mart in comparison to our own Reliance, Bigbazar or More is the buying comfort. Sections are well carved out with related items strategically placed for the shoppers to find them without much walking. Places are well ventilated, spacious enough to walk freely without bumping on to every second person on your way or uttering ‘excuse me’ more often than you blink your eyes, surroundings are hygienic enough with extra care been put in for the sections dealing with eatables. The list of difference is literally endless. I am told even they are so professional that they even do a bit of psychological study to judge by the shopping habit of their customers on what they might look for after buying a certain item ‘A’. Accordingly the related items are arranged for the buyers to find them immediately without putting a whole lot effort in roaming around the entire floor for the same. Sweeping an entire floor for something with no clue on where it could be is something which I am sure many will find irritating. Those guys know it very well, hence that extra effort in adding some comfort to the buying experience.
Look what we have in comparison. The other day, at a store near my home I had this shock of my life. When I failed to find a lighter after my frantic search I reached out to the ground’s crew for that section. To my horror I was told to go to the second floor and to the gift section there to get one. Now here is the thing. When I see the rack of cigarettes lined up just near the checkout counter at the entrance, why in earth they have kept a very vital related item on the second floor? A simple statics on the number of people those buy lighters for themselves and those buy them for the purpose of gifting would tell you how bad that an idea on the part of that store management to keep it on the second floor. Random buyers, only there for cigarettes might just get tempted to buy a lighter if they find them near. Hence, keeping these two related items side-by-side also has a business angle to it than just buyer’s comfort. I even tried to convey them my discomfort and the possible business opportunity they were missing, which I am sure none was too interested to heed much as the look of the entire audience itself wasn’t that promising. It is three years since I advised them but they haven’t moved the stuffs even by an inch. Just wondering; why you ask for feedback every time I go there shopping when you didn’t really mean to implement any of those. What you call this? Incompetence or plain careless attitude towards what an average shopper expects in an organized shopping mall? Well my guess is as good as anybody; on this at least.
You might advise me to be little more adventurous and move out of my neighborhood and go to places these store chains have bigger outlets. I agree the comfort of buying might improve in bigger outlets with larger floor area but what about my vehicle parking? Do our present day stores even think about this, let alone making arrangements? Honestly, I haven’t seen a single outlet irrespective of its size or brand has got any designated and exclusive parking area for its customers. I mean it to every letter of it when I say ‘not a single store’. Someone with an idea on the thought process of our urban development ministry can clear if we have any guidelines to have proportionate parking area with respect to your nature of business and size of the store or not. Big retails outside India do take this on priority before planning to come up with their stores. I don’t quite remember but I think it is Scholes who have come up with this innovative and buyer friendly idea for one of their stores in Munich. Since the parking lot of the store is good 200 meters away, they have made a subway to connect their store and not only that but they also have engaged many Golf park vehicles for ferrying the buyers from the parking lot to the store and back. Call it professionalism or concern for their customers or anything else but these are kind of small things that add to the pleasure of shopping. How comforting it is to know your vehicle is safely parked can only be confirmed by a car owner. Not sure about others but for me, the last thing I want to see is my car being towed away by the traffic cops for wrongful parking and that too when I come out of the store with few huge carry bags for the count.
Another thing that hunts me is the quality of the product that we purchase. As buyers we are used to some known brands and believe in their quality, even though that itself is debatable. Since the upsurge of these retail chains they have come up with their brand of products. Those products which have been launched by these retail chains themselves are mostly the grocery items. To promote their brand, most of the times you will only find their brands that are present on the shelves. It could be of better quality than the brands that we know but what’s the take? Why should I believe any such asurances on its face value? Since when Reliance has got into the business of producing Daal, Rice and Wheat? Is there any government agency that ensures that these brands are worthy to the level and price that these retail stores claim to be? When I see the same chaps doing all sorts of unethical practice in their other business ventures, it only doubles the doubt when they claim they are not selling outright poison to us under their brand. There has to be a guideline where benchmarks of the product for which we pay money are ensured of the quality that we are promised. At least the known brands get their products certified by federal agencies before it gets to the market; not sure if these retail stores would be doing the same for their own branded products. By the way, I haven’t seen ‘Wal-Mart Aata’ till now. Have you?
In nutshell, I see some arrogance and lack of concern for the customers with our present retail store chains. Arrogance has cropped in since they see no capable opponent to spoil their party. In want of any competition, it is we the consumers who are been taken for a toss, time and again. For this to change we need to inject some quality opponents who will threaten the living daylights out of the arrogant lot. A step which could serve as a warning for all those to mend their ways towards professionalism or get off the business. So I feel, we should allow multi-brand biggies getting into India. If not for anything, for the common-man, at least we should give it a try. And for those who feel it will hamper our economy the wrong way; we must also chalk out an exit plan, benefitting both the parties and let it be known to the investors upfront. In the event of things going haywire (which I am sure it won’t) we can ask these guys to leave India as per the exit plan and there you go; we are back to our usual days of empty shells, rotten veggies, exorbitant price, filthy and unhygienic surroundings, outdated materials still stashed in the shelf. So what’s the harm in trying once?

Are these BJP chaps listening or too busy shouting inside the parliament?

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11 comments :

  1. beautifully said.. but I was just wondering from the problem situations those are raised in the write-up.. Allowing FDI must solve major clues as mentioned, but whether that's the best solution... Just to think.. no concern raised!

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  2. Dear, you have written this with a view point of a consumer who has deep pocket and fortunate to enjoy the life, but just read a common man point of view at rediff (they are generally anti modi pro cong site) but that article will give you other view point then may be your view point will be slightly different from economic point of view. you can not be self centered all the time when a social liability is due from every citizen I agree competition is required but do only foreigners are needed to teach us.

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  3. Allowing FDI in multi brand retail is a welcome change.
    your views will be different that of a common man's
    The biggest problem I see is Will Walmart sell Indian products or cheap Chinese products?
    you go to any Walmart store and check 90% products will be cheap chinese or other Asian products.Will it be good for India in long run?
    My personal opinion is 70% products in foreign or Indian retail chain selling should be of Indian Origin otherwise Indian products will have a bleak future especially quality ones.

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  4. If we need FDI to get good product and quality THAN why we can't make and sell those good quality product and sell ourselves


    If we need FDI to get rid of middle-man THAN why we cannot remove middle-man with bringing FDI


    If we need FDI to setup big malls THAN I believe that we have those malls anyway


    I see FDI is going to ruined our local produced product and going to start selling cheap product from China and other countries. Now you'll see that they successfully sell them in America then let me tell you that in US they have to strongly follow law and order for everything no matter whatever they are....


    We are now taking about india where our country already being sold to many and we already have accepted it by saying why to worry.


    Don't know where are we heading....

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  5. If we need FDI to get rid of middle-man THAN why we cannot remove middle-man without bringing FDI (corrected without)

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  6. If the FDI Party in retail sells indigenous products than it is better. Part of the money earned by this FDI giant will return back to the country. Secondly the perceptions like sale of products at good values, better quality, etc. are good to hear but will be difficult to see. We ourselves know how inefficient we are & same part of we are going to work in the retail stores. Lastly these retail giants are here to make money & not for social service, and they have the power to crush any competition thereby hitting the domestic enterprises. For all, especially those who are foreign return & those who have good salaries or large incomes will like FDI retail stores as they want things like better shopping experience, & lot other things to flaunt about, but in a larger picture taking the entire country together, FDI in retail sould be catiously thought of.

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  7. Lets talk about the proposal first. How it could be manipulated both by the investors as well as our corrupt Babus is a separate debate and certainly not the problem of the proposal per-say.


    Coming back to indigenous goods - Would love to know, how many of them actually are.No seriously, go to any present day retail stores like Reliance, Big Baazar and scan the selves and list out the goods that are indigenous. I am sure you will be dissapointed. Even if that is a concern, we can set a clause where we can mandate these international outlets to sell the so called (nonexistent) indigenous products at a 70:30 ratio. If accepting the proposal in the present form looks worrisome then dropping the proposal without thinking beyond is no sane act either.


    Regarding deep pocket, foreign returned, high salary nonsense. I have just a question - aren't guys allowed to expect a little comfort just because they earn good and have a deep pocket? Is that a crime?

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  8. Indigenous goods also do include the farm produce, but who knows the onions the Retail guy will sell can be from Pakistan or rice from China. I agree we hav poor indigenous production & bringing these guys to sell foreign products will further screw the domestic produce.
    And the proposal, well we have several precedents in the country that proposals are crafted with hand in gloves with the investors - a separate debate.
    Spending extra & enjoying comfort is absolutely fine & nobody should be stopped but actions of some may lead to reactions that elses will face.
    The FDI retail proposal when implemented will show immediate good effects for some time but in the long term..........lets be catiously optimistic & hope for better of all.

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  9. well thats one viewpoint as a consumer... lets also look at someone elses' viewpoint on this... http://www.rediff.com/money/slide-show/slide-show-1-why-i-am-against-fdi-in-retail/20121129.htm

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  10. Problem is that all the multinationals use different scales of measurement for different country, however much they deny it. Famous soft drink multinationals would not have survived in the US if they showed the same 'toilet cleaning' effect in US that they exhibit in India. The quality of products and services of may be different in different countries despite the brand name being same.

    POint #2: What is the guarantee that multinationals will not change after entering India? Given the low purchasing power of Indian middle class, these companies may cut down luxury (space, waiting time) mentioned in your article, to make their offering cheaper and affordable to India's middle class,resulting in same types of malls that we currently have (BB, Spar or Reliance).

    If the retail multinationals do come to India, they may also explore the possibility of tie - ups with some of the already existing players, especially in the beginning. That means it is an Ideal situation for some current players who are struggling and itching to sell off their malls off to these potential buyers. Not only that, even those who are doing well may combine with foreign players. Now, remember Arvind Kejriwal and his team. They once said that the current government's policies are meant to help few rich than many poor/ middle class. Also the argument of employment generation would be rendered meaningless with the resultant 'marginal' increase in employment.

    It is the right time now, after 20 years of liberalization and privatization, that we make a performance test of all the related policies of successive governments. FDI in retail is just one part of it. Divide the number of people who were below poverty line by total population of India in 1990(before liberalization), Compare this value with same ratio in 2012. Then we can make cause and effect analysis.

    Whatever be the outcome, it is important have policies that take larger population into consideration than simply following what few economists and businessmen. But are the governments listening?

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  11. Unlike you, I am not a huge fan of FDI in retai, reasons I'll try to clear here.
    1. Having an open global market and free trade with no barrier of course benefits all consumer and producer, theoretically, due to less cost of production and cheap prices etc. Since recent two decades, India has opened its market to multiple foreign investors in nation interest. Here what nation interest is very obvious, it is to fund Indian treasury or deficit. Reforms 1991 onwards were more like a surrender to foreign companies and IMF for loans. Various studies shows how Indian govt. due to its mismanaged and wrong policies made India stand on edge of financial crisis. Again Govt. need money. Its too expensive employment and feeding policies' burdened Indian finance badly. Countries investing in India keep their markets preventive.
    2. FDI will bring money and india will definitely grow, but at the end, it is only business. Net cash flow will be out not into the country. Then Govt. again will take measures to bring more money, like by devaluing rupees suddenly say 80 for dollar etc.
    3. There are better solution instead of FDI but they need a vision and managing skills. Promote Indian entrepreneurs to invest money, create ambiance, relax domestic barriers, and if require, outsource technology and everything else.

    FDI is good when mutual. Those who follow international trade meets of WTO and all know well it is not just FDI but exploitation of developing countries.

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