Hi, This is Neeha. I am interested in the developing Retail sector of India and on this site I found that lot’s of u guys have similar interest. So let’s discuss something here; about the sector or about the day to day challenges faced by the pe…
Hi,
This is Neeha. I am interested in the developing Retail sector of India and on this site I found that lot's of u guys have similar interest. So let's discuss something here; about the sector or about the day to day challenges faced by the people working in this field. As 4 me my interest in Retail developed when I read the Autobiography of Sam Walton:founder of WAL MART. I am too inspired by him and have decided to enter the sector as my career. So let's start the discussion with WAL MART. So the topic is: Should our Government allow FDI in Retail and allow these biggies to enter India????
I know we will have great jobs then with our diplomas in RETAIL MANAGEMENT.But is this good for our country as a whole.
NEEHA
Hi,
But is this good for our country as a whole.
NEEHA
what do you mean by GOOD ? more jobs ? booming economy ? more percapita income ? more equal distribution of the GDP pi ?
Hi Deepu,
More jobs?? So for thousand of jobs provided by the retail biggies if the FDI is allowed then 10 million kirana shops will be closed!!!! So just compare the employment and unemployment ratio if FDI is allowed in Retail sector.
..agreed to a certin extent kirana stores will be closed...but calling fdi in retail the doomsday fr kirana stores is a lil too dramatic...i think the entry of big players will bring in a lot of choice for the consumer...and i also think that come what may..if i have to go buy pencils and pens for a paper tomorrow i will not run arnd town looking fr a wal mart but will be more than happy to go to the nearest kirana...more on this later...good thread...
ciao
Hi Deepu,
More jobs?? So for thousand of jobs provided by the retail biggies if the FDI is allowed then 10 million kirana shops will be closed!!!! So just compare the employment and unemployment ratio if FDI is allowed in Retail sector.
The argument for FDI in any sector is not only about jobs. The argument for invesment in the retail sector for for that in any sector is also about efficiency and bringing in better proccess to area which have been so far neglected.
Also found an interesting piece on the net
http://www.blonnet.com/2005/11/09/stories/2005110900931000.htm
VA
Apart from generating immediate jobs organized retail will have ripple effect on supply chain and procurement as all these retailers will procure products worth billions of dollars(Walmart procures 1.5bn US$ worth from India every year). with supply chain getting in these co.s will establish coldstorages, processing plants etc. plus they will buy/stock white goods, textiles etc. affecting mfg sector also
also end customers like us will get better prices and better quality. if we see all these benefits i guess govt shd allow FDI in retail immediately.
Well guys,
I am not against allowing FDI in retail. But its like our retail sector is worth $180bn and only 3% of it is organized. So its better if we give our domestic players like Pantaloons, Shoppers Stop etc. a chance to develop and capture more part of the sector so that they can have a better chance to compete.
Our total retail sector is worth $180bn where as the sales of WAL MART this year is $315.654bn. So do you think we are in position to compete with them.
As BIZSCOOL pointed out that Walmart procures 1.5bn US$ worth from India every year. So sir for investment of few billion dollars we will be opening a sector of 180 bn US$ and which is estimated to reach 300bn US$ by 2010.
As far as competition goes the domestic competition is also high. We have Reliance coming in with investment of 25000 crore. Then we have Pantaloons, Shoppers Stop, Tata with there Trent group (Westside), Godrej ,few local players like Subhiska in south and lot's more.
Neeha
There's another name that we usually forget in the list of Retail ventures and that's Bharti, venturing into Dairy and Food processing area and also has a foreign partner(Cant remeber the name).
Benefits of retail.
1. Better Procurement
2. Efficiency in the Supply of goods--better prices
3. Competition - Domestic players have to compete- again better prices
4. Exports- The most Impt. one.
Walmart is half our country's GDP(if u take GDP as $770 billion) and that's just one co.:wow:
The point about our retail sector (worth $180 bn) and Walmart's Sales is invalid
Reason-
1.The price of an avg. item in the U.S. cause of PPP would generally be higher than what it is here.
2. Even if the volume of trade is higher or avg spending per household as a %age of spending is higher the anomally of the high sales figure would still arise cause again of the PPP argument.
Economies have to move/change and a transition is inevitible. The argument of Kirana shops closing down and local players bearing the brunt the most atleast to me, today, would be misplaced.
The same arguments had been used when FDI was allowed in Telecom or for that matter automobiles, that the Phoren players would snatch a large part of the market with their and it would be the begining of the End for domestic players.
Are the local/domestic players @ the losing end? Its clear that all have benefitted.
The argument for FDI(in any sector) is not restricted to it being a source of funds/invesment but also about bringing in better process, enhancing efficiency and the obvious benefits of Compt.
China is a fine example of how having FDI in the retail sector has boosted their economy in terms of exports because of the huge procurement from the Biggies like Walmart.
Also areas untouched such as food processing and its related areas would get neccessary impetus.
Also another view(personal) and I have no means of validating it but since Reliance has entered the retail Foray.... Dont think the govt would allow FDI. Atleast anything that's not gonna hamper Reliance's retail venture.
Cheers,
VA
Hi Everyone
Government will obviously allow FDI in retail within 3 to 5 years.This is to remind you that on this thread you can post anything related to Retail. Those doing MBA do tell us what study material your institute is offering in the retail. Those who are employed in this sector can discuss the day to day problems faced on the ground. May be we could find some solution. If nothing else then tell us about your interest in the sector and your future plans for the sector.
Neeha.
Government will obviously allow FDI in retail within 3 to 5 years.This is to remind you that on this thread you can post anything related to Retail. Those doing MBA do tell us what study material your institute is offering in the retail. Those who are employed in this sector can discuss the day to day problems faced on the ground. May be we could find some solution. If nothing else then tell us about your interest in the sector and your future plans for the sector.
Neeha.
i think some kirana stores are absoloutely necessary and will survive the onslot of the malls as when it comes to metros...malls cant get in too deep....and they gotta b really special for ppl to venture out to buy the same 'ol everyday stuff from there...due to the distances,traffic, fuel prices...
sry to break the flow..but cud somebody tell me how one starts a new thread..cant figure it out...
...hey since we have retail enthusiasts here..cud anyone guide me to a place where i could get a database of retail cos in india...wud be helping me immensely...thanks...
ciao
The argument for FDI in any sector is not only about jobs. The argument for invesment in the retail sector for for that in any sector is also about efficiency and bringing in better proccess to area which have been so far neglected.
Also found an interesting piece on the net
http://www.blonnet.com/2005/11/09/stories/2005110900931000.htm
VA
the link u posted was very informative..
The point about our retail sector (worth $180 bn) and Walmart's Sales is invalid
Well Vinit this point is not senseless. May be I didn't explained it in proper context. So let me do it now. Recently you might have seen Pantaloons publicly feuding with FMCGs for a five percent margin.On CNBC I watched DAMODAR MALL: President-Food Business Division, Pantaloons saying that if FMCGS will not give them the margin then they will remove there products from the shelves of PRIL(Pantaloon Retail India Limited). Where as on the same program An executive from HLL said that there demand is RIDICULOUS, they can't dictate terms like WAL MART because the sale through formated retail of India accounts for only 1-2% of total sales by FMCGs. So by depicting the annual revenues of Wal Mart I just want to point out their bargaining power. Because they buy centrally for there thousands of stores and hence get better prices and they pass these benefits to the customers. The core concept of organized retailing is to keep their margins low and earn through volume sales. They provide products at a lower price than small mom and pop stores. So on one side India's biggest retailer PRIL publicly feuding for 5% margins and WalMart which decades back tied up with P&G; to offer better prices.
Vinit I just read the link posted by you. i would be simply great if our govt. would follow the footsteps of China in allowing the FDi in this sector.
NEEHA.
Here I am posting 2 para from an article on retail published in Management Compass. Must read for those who believe that kirana shops can survive along with the organized Retail.,..
"Sample this. In 2004 , Wal-Mart, the largest retailer in the world, reported a turnover of $256bn and was growing at an average of 12 -13%. Its net profit was $9bn. It had 4806 stores, employing 1.4million persons. Of these 1,355 were outside US. The average size of Wal-Mart store is 85,000 sq. feet and average turnover about $51million.The turnover per employee averaged $175,000.In 2004, Wal-Mart had a 9% return on assets and 21% return on equity. In contrast, the average Indian retailer's turnover is just Rs186,000and fewer than 4% have shop space larger than 500 sq feet.
Media reports say that India has 35 towns with a population over 1million in each. "If hypothetically, Wal-Mart were to open a store in each of these cities and they reach the average Wal-Mart performance per store, it would mean a turnover of over Rs 8033 crore with only 935 employees. Extrapolating this with average trend in India, it would mean displacing about 4,32,000 persons. If large FDI- driven retailers were to take 20% of the retail trade, as a now somewhat hard-pressed Indian FMCG majors anxiously anticipates, this would mean a turnover of Rs 80,000 crore on today's basis. This would mean an employment of just 43,540 persons, displacing nearly 8 million persons employed in the unorganized retail sector"
The point about our retail sector (worth $180 bn) and Walmart's Sales is invalid
Well Vinit this point is not senseless. May be I didn't explained it in proper context. So let me do it now..
No I didnt mention that the point is senseless. But the argument of a co. by its sheer size would/should hamper our economy--retail model in specific, is a misplaced argument. Unless policy issues are not in place. I'll further elucidate. Read as you wish.
You had mentioned and I quote "Our total retail sector is worth $180bn where as the sales of WAL MART this year is $315.654bn. So do you think we are in position to compete with them"
Yes, the Walmarts with their might would exercise a better bargaining power like you mentioned. But here again what I am contesting is that taking the annual sales of Walmart which procures in large amounts from China, the cost of which again on a PPP basis would be much lower and the sales of which would be much higher on a PPP basis in the U.S. and not neccessarily in terms of the actual value of goods, which means that the revenues would be inflated. Hope I tried to get the specific point
With all their might Walmart would have to sell at prices prevailing here and adjust costs/revenue structures to what's best suited here.
Recently you might have seen Pantaloons publicly feuding with FMCGs for a five percent margin.On CNBC I watched DAMODAR MALL: President-Food Business Division, Pantaloons saying that if FMCGS will not give them the margin then they will remove there products from the shelves of PRIL(Pantaloon Retail India Limited). Where as on the same program An executive from HLL said that there demand is RIDICULOUS, they can't dictate terms like WAL MART because the sale through formated retail of India accounts for only 1-2% of total sales by FMCGs. So by depicting the annual revenues of Wal Mart I just want to point out their bargaining power*********************NEEHA.
Its a business decision. Prices, procurement,sales, whatever......
Dont thin we should read much into it with respect to the argument of Retail. Do we know all the exact contours of the deal/arrangement? The Futures group(owners of Pantaloon) is the biggest and most well-spread retailer unlike let's say Trent or Shoppers Stop owned by the Raheja's.
Another quote "So its better if we give our domestic players like Pantaloons, Shoppers Stop etc. a chance to develop and capture more part of the sector so that they can have a better chance to compete"
Why,
Instead of giving the specific players you mentioned, a chance to compete the more appropriate argument is give retailers a fair chance to compete. Period. Irrespective of foren on desi.
Remeber the swadeshi arguments about Dont let the Phoren Players to enter our markets
as Domestic Industry would perish.
Cause the Japanese would bring their machines (capital intensive processes) and the Americans would bring their computers(Technology) and since our economy till then was labour driven, so we would lose jobs and people would lose a source of income.
Remeber arguments of -dont bring the Pvt sector in agriculture as millions of farmers would be displaced cause they would be rendered ineffective. But ironically Dairy and food processing and cold storage and areas that are left untouched which is where a lot of Pvt players see an opportunity.
To put it in terms of the lay person,
Werent we told that the GM's , the IBM's and Honda's of the world would capture our market and it would be the begining of Imperialism. Has it happened?
Do you think we would have had a Pulsar, Ranbaxy , indica if it werent for compt.? Have the Infosys,Wipro, TCS perished under the onslaught of the IBM's and the Microsoft's?
Infosys Chairman, NRN has gone on record saying that the IBM's of the world only made them stronger. So we have a Pulsar which is sold in other BRIC economies, a scorpio which is sold in Mexico, a Indica which is sold in the UK, albeit under the Rover brand.
I hope you get my point which is the that we mention the same arguments against FDI in retail.
My point is simple
Look at the Walmarts as a huge source of Exports like the Chinese have. Retailers source 60$ bln in terms of goods from China.
Get them to invest in areas that have been left untouched. They would bring their proccess/practices and use it to you advantge. It would keep the domestic players in check.
There is no denying the FDI in retail is good. But the retails sector and how it benefits the mass at large is a function of good policy. The retail sector would go for a toss even if FDI wasnt allowed. Then how beneficial it ends up being is a Function of a good policy irrespective of FDI or not.
Phew
Vineet
ps. Another link with good info http://www.atimes.com/atimes/South_Asia/HC11Df02.html
I agree with vineet. competition will be good always. any sector in India which opened up prospered..BFSI, telecom, or others. competition will get better prices, products and services to the end customers like us. not to speak of the quality of products improving.
hi neeha ,
i m also looking 4r my career i retail sector. i m having 6 months work exp in pvr cinimas.now i m doing job in call center its a domistec one '' MPHASIS'' ITS A MNC. i m under grad 2nd yr .can i get good start if i do diploma in retail before my MBA .i m 4rm delhi (noida ) can u suggest gud institutes for that plzzzzz.
hi frinds,
plz suggest me about the retail sector. i m under grad 2nd yr .i m 4rm delhi .is ther any gud school for diploma courses in retail sector in delhi or ncr?