Interview With A Shopkeeper On His Views On FDI In Retail

Posted on January 21, 2012 in Business and Economy

By Rishin Mukherjee:

“FDIs in retail space” sounds like a phrase straight out of ‘The Economic Times’ and most people would discard it as another phrase of economic jargon that they do not understand and one that they believe does not affect their lives. However, a recent interview with the small grocery shop-owner round the corner of my house gave me a common man’s perspective of the impending doom for him and similar shop-owners all around India, especially the metros and the upcoming cities. To drive home the point the interviewee has been called “The thread” for his future hangs by a thin thread, the decision to allow FDIs into retail has been put on hold by the Indian Government, what the final outcome is may save or break the thread. For lack of better translation and to bring out the context of the interview, malls or retail markets have been called as ‘super-shops’.

Me: Do u know about FDIs and their interest in retail, and the recent decision by the Government and how it affects you?

The Thread: No son, I m not sure what FDIs mean, although recently there was a meeting of the shopkeepers union, the leader did say something, but it was unclear to me.

Me: You must have heard of names like Big Bazaar and Subhikhsha, do they mean anything to you?

The Thread: Oh yes, sure ! One of my customers the other day was muttering something on the phone about how inconvenient it is for him to buy grocery from my shop and how he wished there was one of those in our city. When I asked him what was wrong, he told me that there are certain super-shops where one can find all their shopping requirements under one roof, huge shops with low prices. I was shocked to hear that. I sell my products at the minimum possible, so that I can both support my family and yet keep the shop in favour with customers. How can they be selling at prices lower than I do? I am afraid if one of those big shops opens up in this city, I am ruined.

Me: This means you know a lot about retail, yes, there are air-conditioned super shops with huge areas where one finds all their shopping requirements, and since these shops acquire material at much bigger size than yours, they get cheaper cost prices, thus their pricing is lower than yours. Now foreign companies want to enter this sector, companies like Wal-Mart, and change the retail sector. The government has put the decision on hold, how do you feel about this?

The Thread (A smile, almost an ear to ear one, a welcome change over his wrinkled face): Bless this Government; at least they stopped foreign companies entering. Had those foreign companies come, they would have opened their super-shops all over the place, even in small cities like ours. My business is already slow, that would have finished my shop. What would I have done? What would I have done, I can’t learn a new trade at this age, ah! May be begging is my future.

Me: Please don’t say so, you are sure to find a job in those super-shops even if they do open here!

The Thread: Look son, they want young people, salesman who will entice the customers into buying stuff that they do not even need. Plus, if a foreign company comes in, they’ll have strict employment rules, they’ll expect knowledge of English. I don’t know English, son! I will never get a job there. May be when they are building the place, I’ll go work as a ‘majdoor’. But what after the work ends, what shall I do?

Me (desperate to cheer up the man): Don’t worry, the decision is on hold, and it is unlikely that the decision will be reversed soon. You don’t have much to worry.

The Thread (hands me the groceries I had asked for): Thank you son! You gave me a bit of a shake-up. I must start thinking, hopefully you can still buy from my shop after those places open, and I give the best prices you know.

As I headed out of the shop, I realised how drastically the life of such shopkeepers might change if Wal-mart enters India. It is obvious that the present generation prefers retail-shopping and with the current companies like Reliance and Big-Bazaar in the market, there is a fine balance between small shops and retails markets. However, if other players enter the market, a pricing war may all but wipe out any chance that small shop-owners have of surviving in this race. A huge amount of people are looking at slow businesses or potential close-down if the Government does not take proper actions to protect their interests.