Magazine 31: Retail Hardsell Script In: Signature Tune Begins Anchor 1 Hello, youre listening to Panoscope, a radio

magazine produced by Panos Radio South Asia. In this edition of Panoscope, we go to India, to track a retail boom, brought upon by its accelerated economic growth and consumerism. The entry of multinational brands has lent color and choice to the consumer, no doubt! But the grim reality of displacing millions of small, unorganized voiceless vendors and shopkeepers looms large In: Bridge Begin Anchor 2 Pushcart vendors wheeling in crisp greens and other garden fresh vegetables through your gate and the ever-familiar Chinnamma (CHIN-AMMA) or Ramu waiting for you patiently at your kitchen door with cane baskets filled with natures bounty is fast vanishing in most developing economies India is no exception. The neighborhood tailor, a measuring tape on his shoulder, a pencil peeping from his earlobe, shouting instructions to his team to drown the whirr of the sewing machines is on the soon-to-be-extinct list at least in urban India. For the emerging middle class, the smiling faces have given way to Reliance and Spencer's thanks to the retail revolution that is sweeping the country. However, below the excitement of this revolution lies a major threat that of the lives and livelihoods of millions of voiceless unorganized retailers. The entry of big players into this sector has already begun eating into their meager profits. Panoscope correspondent Gokul Nair brings us this report. In: Retail Hardsell Final Mixdown.mp3 Fade In: SFX Vegetable Vendor.mp3 Link 1.mp3 A recent report by McKinsey & Company says India has the highest density of retail outlets in the world. Of this, 98 percent of the trade is through the unorganized sector, in the form of family-run businesses, street markets, street vendors and petty shops. Only two percent out of the 15 million retail outlets in India are organized retail outlets. India Retail Report 2007 says that about 100 million square feet of shopping mall space will be added to Indian metros by 2008 and India is set to become the worlds fifth largest consumer market by 2025.

Domestic business giants like Reliance, R-P-G, and Aditya Birla to name a few, have been entering the sector in a big way to capitalize this less exploited market. In India, F-D-I is not permitted in retail but is allowed in certain services. Brands like Chanel, Ferragamo and Valentino have established their presence in India through the franchisee route. Some international retailers, like Germany's Metro and South Africa's Shoprite, have entered India with a cash-and-carry business that supplies only retailers, restaurants and business houses where the Indian government permits F-D-I. Besides Wal-Mart, Tesco, and Carrefour are waiting in the wings, to enter the retail space with Indian partners. Small and medium sized indigenous retailers are highly disturbed by this trend. Denesh Kumar of Kovai Pazhamudir Nilayam, an indigenous, thirty year old vegetables and fruits retail chain spoke to Panoscope. Act 1, Denesh 1.mp3 It might be a threat to small traders. Probably that class might diminish or come down to great extent. Thereby, again generating unemployment. The very cause, the very propaganda which the government of India had earlier was having self employment. They might be misled by all these corporate entities telling them that theyll be generating lot of employments. But the figures are all manipulated and its not for the good cause of the small traders. Medium size entrepreneurs might do well, will do well, efforts have to be put infrastructure have to be developed. So theyll buck up. But those who cannot afford it, the small traders who cannot afford it, out of sheer competition will get affected. Link 2.mp3 Wal-Mart, the international retail giant had to battle stiff opposition from Indian retail chains and government policy before it inked its entry into India. This was done by floating a joint venture with Bharti to supply back-end supply chain technology and related processes. Bharti will front-end the deal; owning and running the stores, which are likely to be co-branded. Small traders are aghast; they claim Wal-Mart has made a silent back door entry. Wal-Mart has had a string of controversies attached to its identity. One, is the practice of sourcing from other countries due to huge buying power, this proves detrimental to the local economy. They were also criticized for their employment practices, including ethnic and gender discrimination in hiring. India is not WalMarts first cash-and-carry experiment. It operates a similar model in Mexico. Dr. Vijayabhaskar of Madras Institute of Development Studies shares his observations. Act 2, Vijayabhaskar 1.mp3

For instance in Mexico, the working conditions of the workers didnt improve simply for the reason that most of the workers are unskilled workers. In retail, we do not need workers with huge amount of skill which means that there is a huge supply of unskilled workers and there is no reason for the firms to improve the working conditions unless something else happens. You know the state legislates prescribing minimum wages or some kind of security for employment contract and so on. That has not happened at least in Mexico. The second one is the farmers prices. In the short run yes, at the same time on the long run what can happen is, you could always set off farmers in one country with the farmers from another country. Suppose you are sourcing potatoes from a farmer in Punjab. There is nothing that stops big retail giant like Wal-Mart to look at China and find prices cheaper there and source potatoes from there and not this guy. So in the long run it can happen that there is a squeeze on the prices that the farmers get. Simply because of the reach, they can source from the huge network of suppliers all over the world, which a local guy cannot. This can happen in the long run. Link 3.mp3 A-T Kearney's Global Retail Development Index-2007 details that the Indian organized retail industry is growing by 40% every year and the retail turnover is projected to reach $ 427 billion in three years. Consumers are largely attracted towards these shops due to rock bottom rates and attractive discounts. This change in consumerism has been churning deep socio-economic currents throwing up promises of big profits to a few while threatening livelihoods of 40 million small vendors. There are about nine million small grocery shops in India. With organized retailing poised for high speed growth, local traders are left with few options. Most of the traders are reducing their business day by day for the fear of incurring losses. Food retailers have diverse opinions about the entry of big players. Denesh Kumar has this to say Act 3, Denesh 2.mp3 For any corporate structure, doing perishables is going to be little tough. For instance like in fruits and vegetables, because in Indian market this frozen fruits and vegetables, that particular culture has not yet come. So the shelf life of fruits and vegetables is maximum for two or three days. But the cycle which the corporate people have is little big. Whereas for them dealing with food grains and cereals anything like that apart from perishables might be a cake walk. It can be stored. Link 4.mp3

Small traders claim it is the foul play by big retailers that is hurting their business. Selling of surplus vegetables at the end of the day to hotels at throw-away prices is one of them. Small-time traders are also badly hit by cut in quantities of produce from farmers as most of it is being sourced by larger retailers. Small store owners are moving slowly towards increasing financial crunches and evident loss of business. With incredibly deep pockets, retail giants like Wal-Mart or Reliance will be able to sustain operational losses for several years till its immediate competitor is wiped out. This is a common predatory strategy used by large players to drive out small and dispersed competition. T. Vellaiyan, President of the Tamil Nadu forum of Traders Association feels that allowing corporates into retail would result in monopoly in the sector. Act 4, Vellaiyan 1.mp3 International companies should not be allowed to enter India under any circumstance. The British came to India on the pretext of trade. Later they enslaved us and ruled us. This is history. Even now, if we allow foreign companies in, the freedom of our nation will be in question, yet again. If we allow foreign companies or even domestic corporate giants into retail, they will grab the entire retail market, using their deep pockets and aggressive marketing strategies. Unable to compete with them, our local retailers will lose their business. Once the local trade is crushed the foreign companies and domestic corporates will start to sell produce at unjustifiable rates. At the beginning theyll sell at low price and destroy the domestic trade and then once the competitors are crushed theyll sell at higher rates. Once a few companies establish monopoly in the sector they might establish syndicates and jointly decide on the prices of selling and procurement of these goods, like they have done in the cement market. Link 5.mp3 Balamurugan and his brothers own three family run shops selling vegetables and grocery in the area of Choolaimedu, in Chennai. A Reliance Fresh outlet opened two months ago in the street adjacent to Balamurugans shop. The family has already started to lose business in all of their shops. Worried Balamurugan is but one among the huge crowd of protestors against the entry of Reliance Fresh to Chennai. Act 5, Veg Vendor 1.mp3

We are four brothers and we live together. We have three stores. As far as Reliance is concerned, our business has slowed down, since it opened... Before Reliance came in, we were doing okay But once it entered, not only the vegetable business but also the provision stores have lost their business. We have been protesting to remove Reliance from the very beginning. We are taking all possible action .But we do not know if it will have any impact. We have to wait and see. Since we live together its a big family. We used to earn ten to twelve thousand a month, but after the entry of Reliance, it has gone down. Now we find it difficult to maintain our huge family. We have totally 12 members in our family. Four of us run the vegetable shop. And another four run the provision store. Link 6.mp3 Balamurugan feels it is the comfortable shopping experience the big players offer which is attracting the customers. But all this is making life hard for the street vendors and petty sellers. Act 6, Veg Vendor 2.mp3 So we are protesting and fighting it from the beginning to date. The P-M-K headed by Dr. Ramadoss has also been protesting this. Our protests and struggles will intensify in future. Since they are operating with vegetables, fruits and general provisions, even the smallest hawkers are affected by this. So we have done as much as we can to stop Reliance, we will continue to do so our protests will never stop. Link 7.mp3 The striking feature of Indian retail scene is its duality. On one hand is a large number of small retailers, and on the other, a small number of large outlets. The big retail chains have a lot to offer for both the farmer and the consumer, while the vibrant local trading community is going to be hit hard. Apart from the traders, another sector that remains in dilemma is the farmers. The retail giants claim that their entry is going to benefit farmers the most, as their procurement prices are higher and the middle-men will be done away with. Denesh Kumar however disagrees Act 7, Denesh 3.mp3 When these corporate people say, they are going to benefit the farmers, how is it that they are going to benefit the farmers? Farmers generally have perishables or food grains. When the demand is lower than the supply, prices fall. When there is a demand for the product and supply is less, prices shoots up. Corporates are not going to earn for the farmers they are not going to earn and

give the money to farmers. Imagine tomorrow the entire thing becomes monopolized; there are no other players, then the corporates what they demand will be the final thing. Link 8.mp3 FICCI has estimated that the total retail business in India is around 11 billion rupees or 44% of the G-D-P. Of this, many are marginal businesses -- small shops, street vendors and hawkers -- which will be destroyed by the competition from large retail outlets and chains. Even without F-D-I driving, the Indian corporate owned retail sector is expanding at a furious pace with a lot of Indian money being already pumped into the sector. Act 8, Denesh 4.mp3 The government must be sensitive to such decision making. They must think of what the people need. It is not only the corporates which have to survive. It is first the common man who has to survive because they got elected because of them. Think about them first then think about the corporates that is the way to work development. A common man has to develop and grow, because tomorrow if the common man will not save then ultimately the economy will be in problem. Link 9.mp3 The government is yet to take into account the fact that the large class of small retailers is slowly and silently getting displaced and deprived of their daily bread. Many of these retailers, who have no alternate skills or source of income, may be left completely destitute even as the associations and unions keep screaming slogans and protesting. In: Bridge End Anchor 3 Thats it for this edition of Panoscope. Thanks for listening. Fade In: Signature Tune Ends Panoscope is an independent production of Panos Radio South Asia. Were committed to providing a forum for voices, views and issues not often heard in the mainstream media. If you have suggestions for future programs, please contact us at: Panos Radio South Asia G.P.O. Box 13651 Kathmandu, Nepal

Or you can call us at 977-1-5521889 Our website is www.panosradiosouthasia.org Until next time