Discounted dreams

In his tiny, dimly-lit grocery shop, Babulal Borana stands behind a counter topped with grimy plastic bottles of sweets and surrounded by loose sacks of rice, lentils and spices.

He lights an incense stick in front of the deity Laxmi, the Indian goddess of wealth, and prays feverishly for the survival of his business.

Housed in a decrepit building, Borana's shop has been doing brisk business for over 20 years.

But eight months ago, a dizzyingly lit, air-conditioned supermarket run by Reliance, an Indian business giant, was erected just a few yards from his shop.

It has been weaning away Borana's customers, shrinking his earnings by half.

Borana, 50, who never went to school, says his business will perish if supermarkets and malls continue to spring up.
“This shop is all I know, all I have,'' he said. “I cannot compete with them.''

In recent years, the advent of Western-style supermarket stores has drawn vehement protests in various Indian cities by the country's small, unregulated push-cart vegetable vendors, hawkers and the 12 million neighbourhood family-run shops called kirana stores — all high up in India's poorly run but active retail ecosystem.

Over 200 million Indians depend on the highly fragmented retail industry for their livelihoods — they constitute 97 per cent of India's total retail market.

The Western-style stores feature long aisles, refrigerated cases, uniformed and meticulous workers, and offer a variety of products — from fresh produce to other consumer durables — all neatly packaged, accurately weighed and attractively priced.

India's small family-run stores, on the other hand, are chronically wasteful, with prices 20 per cent higher than those in big stores. They buy in small quantities, lack storage facilities to keep produce overnight and have almost no expertise in inventory control.

Lucrative market

India's retail market is huge — believed to be worth $328 billion. According to the Federation of Indian Chambers of Commerce and Industries, by 2010, the annual retail market is expected to grow to $427 billion, and Indian business conglomerates as well as multinationals companies (MNCs) are eager to grab a share of this lucrative market.

Today, as India's economy surges at 9 per cent, one of the most bitter debates in the modernisation of India's economy is whether to allow large corporations to invest in the retail sector.

In late 2006, Reliance Retail, run by billionaire tycoon Mukesh Ambani, started 300 stores in 30 cities across India with an investment of $6 billion.

This year, Wal-Mart launched a partnership with Bharti Enterprises to build a chain of supermarkets that are likely to start operations by next year.

Other big multinational retailers, including Tesco of the UK and Carrefour of France, have also evinced interest in India's retail market.

But these plans are giving rise to widespread social unrest fuelled by the fear that millions of the poor will lose their livelihoods.

According to a 1998 census, nearly 45 per cent of all unorganised retail businesses in India are run by groups recognised as particularly marginalised sections of society — lower castes that, in local parlance, are called Scheduled Castes and Other Backward Classes.

“[What] the presence of retail giants will do is push this section into penury,'' Babu Matthew, the country director of Action Aid, an international NGO, says.

“Allowing Wal-Mart and other MNCs into the Indian economy will reduce opportunities for self-employment, especially for the poor, both urban and rural, in non-agricultural enterprises.''

In recent months, Reliance's stores were vandalised in the states of Orissa, Uttar Pradesh and Jharkhand. Recently, 5,000 unorganised retailers from all over the country, packed in buses and trucks, descended on Mumbai to lead a massive protest rally against Wal-Mart and others setting up big retail outlets.

At the protest, led by an activist group called India FDI Watch, an activist pleaded that the likes of Wal-Mart should read the history of India's freedom struggle.

“Britain's East India Company came to India as a trading company and then ruled over us for nearly two centuries,'' he bellowed. “Today, independent India is in danger of being taken over by MNCs such as Wal-Mart.''

In August, the government of Uttar Pradesh, India's most populous state, ordered the closure of all ten supermarkets run by Reliance Retail as it didn't want to upset shopkeepers, a majority of whom are from the lower castes.

Chances of coexistence

But retail giants such as Reliance Industries maintain that India's retail market is big enough for all players to coexist.
“Organised retail is not the evil business it is being made out to be,'' said Mukesh Mehta, the managing director of Reliance Industries. “India's retail market is so huge that there is place for everybody, including smaller players.''

He also asserted that his company's retail initiative was configured to improve supply chain distribution efficiency and promote high-tech farming methods that bring better yields and reduce wastage.

“At present, 30 to 35 per cent of 60 million tonnes of fruits and vegetables — more than the entire fresh-fruit produce of the UK — are wasted due to a lack of storage and other facilities,'' he said. “Organised retail chains will minimise this.''

However, shopkeepers such as Borana — heirs to one of the world's longest-surviving selling traditions — complain that their business is shrinking because players such as Reliance are monopolising the market, offering products at prices a small player like him cannot match.

Moreover, they manage to entice customers by advertising attractive shopping schemes through local radio and glossy print advertisements — marketing stunts he simply cannot afford.

Rekha Satyani, 49, was a regular customer at Borana's shop for over a decade.

But with a new supermarket in her neighbourhood, her patronage changed. The new store better suits her grocery budget and offers quality products, she says.

“Aren't Indians entitled to world-class shopping?'' she asked, rustling plastic bags that bore the Reliance logo. “You need to change with the times.''

Anuj Chopra is a freelance writer based in Pune, India.