Hava Nagila!

Everything does pass, and we can endure and we can survive!! – Rahul Dravid

FDI in retail in a temple economy – Part 2

Continuing from Part 1, I believe that FDI in retail in India will fail, despite full support from the Govt because they can never be as personal as Annachi (That is what we call local traders in Tamilnadu. The term means elder brother.).

  1. Most people in India buy things in quantities of their choice. Annachi will give me 2 tomatoes, 5 potatoes and 3 onions if I want. I can never get this in supermarkets.
  2. Many people buy things for credit. That will not be an option in supermarkets.
  3. If I go into Annachi’s shop, he knows what I want. In the beginning of the month, he knows that I am in his shop with the list of things I want for this month. He knows that I look for choices, so he offers me what is new. In the middle of the month, he knows I am there for items that would have run out like soap or shampoo. Most people have a buying pattern and most retailers in India have the mental capacity to retain and recollect it when required. Walmart isn’t going to do that. Ofcourse, supermarkets will also give me attractive offers but then, it will be upto me to get to know and evaluate the choices. No one is going to come and speak to me. We like our individuality and freedom, but we prefer company when evaluating choices and coming to decisions.
  4. I can bargain with Annachi. Indians love to bargain, regardless of anything else. We get satisfaction from the fact that we made the trader sell a product for lesser than what he offered in the first place. Traders know it too. The Annachi next door gives me Re.1 off atleast on MRP on most products. Based on my bargaining capacity, he will reduce the cost further.
  5. Annachi opens shop early – earlier than any supermarket. I can start getting stuff from as early as 7 AM in Chennai. Most traders give their number these days and we can contact them at any time in case we need something urgently. In our house, we buy rice and water from the same shopkeeper. I can call him even at 9 in the night and he will deliver the can/ sack of rice in the next 10 to 15 minutes.
  6. I can tell Annachi that I will pay him the remaining Rs.10 next time I come. So can he. Annachi values my relationship and so he makes these adjustments for me. The local flower vendor next to my house delivers flowers at our doorstep even if we aren’t there at home, that is, even if the house is locked. I can come at 10 PM and take the flowers in. She does it for the sake of retaining a customer. I appreciate it and give her the money next time I see her.
  7. They know me. I was walking with my perima a few years ago in Besant Nagar. We stopped to buy some vegetables at a road side shop. The vendor’s face lit up in a smile as she recognized my perima, who was in Chennai after a few years. She enquired how her daughter was and was informed that she is now married and is in US. We bought few vegetables and she gave us a good deal!
  8. They talk to us. In India, personal space is rather limited. Depending on age and gender, we discuss our issues and share our happiness with the vendors who also do the same with us. My friend had gone with her mother for a walk when she was pregnant. She used to buy fruits at a particular shop. The shopkeeper offered her free advice on pregnancy, not that my friend needed it! But it helps build a relationship. Ofcourse, my friend stopped going to the shop when she was admitted in hospital for the delivery. So, the shopkeeper asked my friend’s father as to what baby she had delivered. 🙂 🙂 They greet us with a smile. I have offered my books to one of the shopkeeper’s sons when I graduated and have provided advice on applying for colleges, etc. I have even discussed with the shopkeepers on the advantages of the internet, online shopping and certain other topics that they want to know about.
  9. Billing is easier and faster. If there is a big crowd, annachi encourages people to leave the shop after making the purchase, so that space is cleared up for other shoppers. He will collect the money later. In most supermarkets, billing at a counter takes double the time that it takes for doing the actual shopping. That is frustrating!
  10. They save me money. Apart from giving me good deals, they do not entice me with things that I don’t want. They do not provide stupid offers or offer chocolates in exchange for Rs.2. Instead, they adjust it next month’s bill.
  11. I can pick and choose vegetables and fruits. Vendakaaya odachu paathu vaanguvaanga, Beetroot a keeri paathu vaanguvaanga. Most items in super markets are packeted and people don’t have this option.
  12. India is extremely diverse and each area has a specific taste and buying pattern. Annachis know this better than supermarkets. We, in India, like to call kathrikkai as Brinjal. Supermarkets have taken to labeling them as Egg Plants. The sales girl in a supermarket told one of my friends that no one is buying brinjals from there and that they are having to waste the stock that they take out for the day. My friend told her to change the name board to Brinjal and lo and behold, from next day, their wastage reduced drastically. The thing is, West Mambalam is a Brahmin dominated area and most people who come to buy brinjals don’t buy it when it is labeled as egg plant, what with all the controversy already surrounding BT Brinjals. 🙂 🙂 Walmart can devise one strategy for Chennai at best. That is not enough. They will need to devise different strategies for West Mambalam and Anna Nagar. Supermarkets can’t simply adapt to the seasonal needs of every area. For example, in Besant Nagar, Velanganni festival is a huge season for selling fashion things. Pavement shops sell fancy earrings from Re.1 to Rs.100. The supermarkets nearby simply haven’t been able to compete with these vendors for the past decade! While one can argue that it is the responsibility of the area supervisor to do these things, it is near impossible to hire the perfect supervisor for every area. Even if this happens, their ability to compete with existing annachis is a big question mark.

I am not trying to say that annachis are great and are free of blemish. They have their own faults. But they have huge advantages which cannot be offered by supermarkets.

My guess is that even with very aggressive pricing models and market penetration strategies, these giants can capture only a very limited market in urban areas. It doesn’t look like farmer suicides or any other vice in the retail market is going to change because of this move by the Government. Furthered by our politicians’ greed to obtain hefty kickbacks, we are likely to see the backs of these global companies in less than 5 years – just my guess. Every time the Govt changes, they will have to pay and heavily at that! And we have elections for LokSabha and Assembly in every state, almost once every two years. Local retailers also pay for this but then they are already used to doing it.

There will be some revenue that supermarkets will make out of this investment, surely. And this is going to go out of India. However, eventually, when these giants leave, our retail market will be stronger than it is now.

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5 comments on “FDI in retail in a temple economy – Part 2

  1. Pingback: FDI in retail in a temple economy – Part 1 « Hava Nagila!

  2. Sathish DV
    December 11, 2012

    Fantastic analysis!!!!

    • Meenakshi
      December 11, 2012

      Thanks Sathish…. I didnt know you read such articles…. 🙂 🙂

  3. Jayashree
    December 20, 2012

    Talk about missing out interesting titbits/gossip when you chat with the shopkeepers..:). One does not care about who lives next door in western countries, or about who the customer in a shop is. Life is machine-like and I hope such a culture does not take root in India.

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This entry was posted on December 11, 2012 by in Current Affairs, Thoughts and tagged , , .

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