Presently, govt doesn’t permit foreign retail giants to start business in grassroots retailing, since their phenomenal financial power and scale of operation can elbow out small grocery stores and other outlets in every locality. Which is why Bharti’s tie up with Wal-Mart is limited only to cash-and-carry business, the same as what Germany’s Metro Group is planning, and so indeed other retail giants like Groupe Carrefour of France and Tesco of Britain.
What is cash-and-carry business? Cash-and-carry stores are large stockists of every conceivable over-the-counter items of every brand. From them the end-seller retail stores will buy for selling to general public. This means that the tribe of distributors, who now control and maintain the supply chain between the producing companies and smaller stockists and retail stores, will shortly become affected.
In the next stage, big Indian retailers like the Bharti Group, Reliance and others will themselves open scores of wholly-owned large-format shopping destinations (similar to say Pantaloons’ Big Bazaar) as well as franchisee-owned neighborhood stores.
Reliance has already put out newspaper ads almost a fortnight back looking for any number of retail space and franchisees in the entire East and Northeast India. They’re looking for space having carpet area as little as 500 sq ft to as much as 20,000 sq ft.
Bharti Group’s advantage will be that its and its franchisees’ backend supply will be taken care of by the formidable Bharti – Wal-Mart association. On paper, Bharti Wal-Mart will cater to every end-retailer. But perhaps there will be some unknown preference for Bharti’s own stores and its franchisees.
We’ll wait and see how India’s retail scene slowly but irrevocably undergoes changes.
A New Market grocer: close to heart and hearth
[© 2006 Project for Public Spaces, Picture source]