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WHITE PAPER ON IMPACT OF FOREIGN DIRECT INVESTMENT & BIG CORPORATE HOUSES IN RETAIL TRADE OF. CONFEDERATION OF ALL INDIA TRADERS 1317, D.B.Gupta Road, Karol Bagh New Delhi-110005(India). What is Retailing.
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Retail is the world’s largest industry with an annual turnover of over $6.6 trillion in 2000, which is Rs 31,02,00,00 Crores.
“The sole aim of giant retailers is to dominate the markets they enter with the objective of eliminating the existing retailers.”
The modus operendi is:
Utilize Deep Pocket size – These retailers use their deep pockets and indulge in ‘Predatory pricing’ in order to starve competitors of funds. Wal-Mart has an annual turnover of US $ 285 billion, almost half of India’s GDP. This is currently more than the entire retail market in India.
Global Sourcing – Given their global outsourcing skills, multinational retailers initially leverage this advantage to provide products at cheaper rates than the small retailer. When competition is driven away, prices are jacked up.
Wal-Mart was able to replicate this move to perfection in UK. The company acquired the British retailer ASDA and then used its outsourcing power to annihilate Kingfisher, a domestic retail chain in UK.
Impact on Competitors
• Competition is being whittled down to a select few players.
• Smaller players have either been acquired by the majors or have been forced to play a restricted regional role in a limited area.
• According to M+M Euro data top 20 food retailers have a market share of over 59% food sales in Europe.
• It further states that in 2000, the top 5 food retailers had over:
• 99% market share in Norway • 94% in Sweden
• 88% in Switzerland • 64% in UK
• 57% in Portugal
The Thai Government, which very magnanimously opened its
door to invite the large retailers, now has created a
separate fund to provide financial assistance to the local retailers
India remains one of the few markets untouched by this frenzy.
The efficiency with which the small traditional retailers have served India are indicated in a RBI study which stated that Indian trade margins were the lowest in the World
• During Pre-independence days the traders not only participated in freedom movement but also extended full assistance to the leaders in all forms like manpower and money.
• In all social activities by establishment of Schools, Colleges, Hospitals, Mandir, Masjid etc. traders have made significant contribution.
• Throughout the year, 24 hours a day, traders render services to meet daily requirements of customer.
• Even during the days of acute shortages, the traders somehow manage to arrange supply of goods for customers.
• Indian traders maintain cordial relations with customers just like family members.
• Indian traders have always seen customer satisfaction above personal profit.
• Traders are self-employed and also provide employment to entire family and others.
• Traders give employment even to the neglected section of society.
• Traders take care of entire family of his employees.
• All direct and indirect taxes levied by Central, State and Local govt. are deposited by trader in Govt. treasury without any remuneration. Thus they are making substantial contribution to exchequer.
• During national calamities like famine, floods, earthquakes Tsunami and other natural calamities, the traders have never lagged behind to extend full help to Government.
• In order to gain political mileage, traders are cursed off and on.
• After independence, multiple laws concerning trade were enacted which adversely affected Traders.
• Traders have been made targets of disgrace and hardships under Inspector Raj.
Implications of large Multinational & Corporate Retailers in Retail Trade
• All the traders will be rendered jobless. India is very different country where the markets have evolved over hundred’s of years. The traders made redundant will struggle to find alternate employment.
• Multinational companies are also known to get into contract farming in order to exercise more control over their back end.
• With control over both supply (the farmers & producers) as well as demand (customers), multinational retailers will be able to exert the pressure of price
• FARM LABOURS
• COMMISSION AGENTS
• TEA SHOP OWNERS
• SHOP KEEPERS
• CONSUMER COOPERATIVE SOCIETIES
• SMALL SCALE-INDUSTRIES & MANUFACTURERES
So, if multinational retailers were to recruit 1,000 people, close to 15,000 currently employed personnel would land up losing their jobs.
are already being flouted !!
Metro GmbH a German retailer and Shoprite Holdings Ltd., from South Africa are two prominent multinational retailers that are currently operating in India. Under the guise of conducting wholesale trade, Metro GmbH was indulging in retail trade. Shoprite Holdings on the other hand was contravening the rule of the APMC by carrying out wholesale from outside the ‘designated market yard’.
These activities are just an indicator of the aggressive attitude of the multinational retailers, which is already being felt in other Asian countries that have recently opened up retail to foreign direct investment.
The criteria for Foreign Direct Investment as laid down by
Dr. Manmohan Singh in early 1990s:
Retail is nothing but the last leg of the value chain, why should we offer this on a platter to outsiders and in the process create unemployment for crore of our people?
The size of the large retailers, their growth pattern, modus operandi, method of capturing markets and their past history is all available to us.
India should pay heed to the situation of other Asian countries rather than, take corrective action later when the situation gets out of hand.
There is enough evidence to suggest that countries like Thailand, China and Malaysia have suffered. Should small Indian retailers also be made to suffer in order to fulfill the ruthless quest for growth of multinational retail chains??
• Govt. should identify the weakness of present retail trade.• Govt. should specify the areas where customers are not being served properly.• Govt. should specify what it expects from retail trade that is not being met presently. • Govt. should spell out merits of FDI in Retail Trade.• Govt. should come out with White paper on FDI in Retail Trade specifying the picture after 25 years and 50 years.• Zoning laws should be implemented in India, no MNC be allowed to open malls within city limits, but in the outskirts.• Govt. may consider runing pilot projects in India. A city or two should be identified where global retailers may be allowed to open stores. After proper study of their impact on local retailers, a future course of action can be decided upon.• The big global retailers should not be allowed to run small retails shops in India. Rather, they should have restrictions on the operating area so that they operate only in large scales for e.g. Limitation may be imposed that MNC may not operate below say 3000 sq. feet of shop area.
• Don’t see India as population of One Hundred crore & mouths to feed.• See it as a Market of One Hundred crore consumers with two hundred crore eyes to watch your prodcuts and two hundred crores hands to buy your products.• World largest Emerging Retail Market: Who will Conquor it:
WE OR THEY?
DO NOT MAKE MY GOVEREMENT AS,GOVEREMENT BY MNC & Corporate HousesGOVEREMENT OF MNC & Corporate HousesGOVEREMENT FOR MNC’S & Corporate Houses