Politicians and Organized retail in India

Ever since organized retail started spreading its presence in India, owners of mom-and-pop stores have steadfastly opposed them. Interestingly enough, communist leaders like Mr. Prakash Karat or Mr. Sitaram Yechuri are big supporter of this opposing movement. This makes them a very odd set of couple. Historically the kirana shop owners across the country have been big supporters of BJP. Communists who claim to have poor labourer as their primary support base may also get impacted by the potential job loss in the Kirana stores.

However the Kirana stores will close their shutter only when business is going to significantly move away from them. And this is likely to happen when the retailers become large and efficient enough to generate scale related efficiencies which may lead to lower price for the buyers. Lowering of retail price is going to move customers away from the Kirana to these big-box players. However this would allow millions of poor Indians to buy their grocery at a cheaper price. This is exactly what Walmart has done in US and hence in spite of strong lobby in smaller towns from the local mom-and-pops, it has grown into a chain of more than 4,000 stores in USA. Interestingly enough it started in rural American in relatively less affluent communities in south where it gained ground quickly with it's "Always Low Price, Always" model.

Hence the issue is relatively simple for the politicians. A spread in popularity of organized grocer can happen only when they can provide grocery items at a lower price compared to the Kirana players. This has not happened in India yet and hence most of the retailers are worried that the "Number of footfalls" is not be translated to proportional business. At the same time, there is absolutely no report of closing down of the kirana stores. However even if they are able to fix their model and start making money at the expense of mom-and-pops, the benefit will also be enjoyed by number of customers who can effectively reduce their monthly bills for the grocery items. Our beloved party leaders should welcome these big-box players instead of opposing them!

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