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Big retail won’t hurt kirana shops: Study

Organised retail does not pose a threat to a large number of neighbourhood ‘mom n pop’ stores, reveals the preliminary findings of a study by the Indian Council for Research on International Economic Relations (Icrier) to be submitted to the Union Government by September-October 2007...

Written by Smitaaggarwal | New Delhi |
September 14, 2007 12:38:17 am

Organised retail does not pose a threat to a large number of neighbourhood ‘mom n pop’ stores, reveals the preliminary findings of a study by the Indian Council for Research on International Economic Relations (Icrier) to be submitted to the Union Government by September-October 2007. The study also found out that despite the presence of large corporate retailers in southern India for much longer periods, the small convenience stores in the region have not witnessed a decline in their revenues, said Icrier director and chief executive Rajiv Kumar.

Leading south Indian retail chain — RPG group’s Spencer’s Retail limited — has been operating in southern India for over a decade, with 40 stores in Chennai alone. “Our stores have existed alongside neighbourhood shops and kirana stores; and we have never faced problems with any traders group or association,” said Spencer’s Retail Ltd vice-president Satyaki Ghosh.

On the contrary, Kumar added, wherever large malls or supermarkets have opened, traditional format retailers are not only trying to hold their fort but also expand and upgrade. “In such a scenario, credit from commercial banks is a constraint for unorganised retailers who want to expand. The issue is how credit can be made available at reasonable rates to these retailers so that they can compete more efficiently,” said Kumar.

He pointed out that there is an adjustment process leading to net gain in employment — the traditional workforce is being absorbed in layers of organised retailing and skilled workforce is being integrated at the front end. “Modernisation of retail will not be at the expense of labour. The preliminary findings point out that there is no employment loss in unorganised sector,” said Kumar.

Icrier was given the task of studying the impact of the entry of organised retail on small neighbourhood and kirana stores by the Government in the wake of continued traders’ and farmers’ protests. The committee constituted to frame a comprehensive retail policy by the Government will consider the findings of the Icrier study. Categorically denying the levying of additional cess or any tax on modern retailers, Kumar said that the study does not recommend any such initiative.

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