When the initial foray was being made into the organized retail space by the Indian majors and select multinationals, we witnessed a huge backlash from the mom and pop stores, small vegetable vendors, politicians and some sections of the press.
Two key arguments against organized retail were:
- It would kill the mom and pop stores
- It would kill the small vegetable vendor (both small shops and the one who sells on a mobile cart)
Recently when i was in India, I noticed something strange happening in a Reliance Fresh - a national retail chain outlet near my house. The outlet opens at 8 am every day (including weekends). Between 8 am and 9 am, I noticed the shop was flooded by people who were essentially the small vegetable vendors and the owners of the mom and pop stores. At 8 am when the outlet opens it is filled with fresh vegetables and other fresh products with limited shelf-life like milk. These small vendors over time must have figured out that Reliance has driven suppliant chain efficiencies to an extent where it would be difficult for them to beat them. So they did the next best thing, to empty the shelves in the first 1 hour by purchasing everything and then playing their card of convenience and selling the same goods (vegetables and milk) at a higher rate.
Essentially the same organized retail segment which every one feared would kill the mom and pop stores and the small vegetable vendors is now feeding their lifeline (at least for now).
In the bargain, the main beneficiary of the organised retail segment – the consumer, in this case, is still getting ripped off by the higher prices as products change unnecessary hands before they reach the consumer. This is a discussion for some other day.
The key take away for me was the same set of people who threw stones and forced closure of the retail chain outlets when they first started have now started using them as part of their supply chain. This is what Swaminathan Aiyar calls the Indian “Jugaad” – they always find a way to work things out :)
