With the opening of a new mall, claimed to be the biggest in the country, Kochi has joined the group of cities with a one-stop entity for high-class shopping and entertainment. Even as it offers a new experience to city shoppers, small traders are looking at the shopping extravaganza with trepidation.
The mall has been opened at a time when threats loom large over the arrival of foreign multinational groups in retail. Despite opposition from traders’ organisations, the government had permitted foreign direct investment in retail. State governments have been allowed to use their discretionary powers to permit foreign retailers.
Though the Kerala government has promised to keep FDI in retail at bay, the ‘mom and pop’ stores are unable to digest the arrival of a large ‘swadeshi’ group in retail. For them, the presence of any multinational in their vicinity is a grave threat.
Kerala Vyapari Vayavsayi Ekopana Samithi and the Kerala Samsthana Vyapari Vyavasayi Samithi, two prominent organisations of traders, are opposed to the entry of big players in the retail segment.
The fight continues, says M. Krishnan Nair, vice-president of Kerala Vyapari Vyavasayi Ekopana Samithi. It is a question of survival of thousands of families in unorganised retail, he says. The arrival of an Indian player or a foreign multinational does not make much difference to traders.
“It could be true that hundreds of Keralites have found employment with the Indian group, but there is an equally disheartening scene of loss of business in unorganised retail,” he says.
Binny Immatty, president of the Kerala Samsthana Vyapari Vyavasayi Samithi, vehemently opposes biggies in retail, be it from within or outside the country. Even the entire lot of retail businesses on Shanmugham Road and Banerjee road in Ernakulam would be too small an entity to compete with the new business conglomerate at Edappally. “Businesses are crumbling in Kochi; shipping sector, chit funds and a host of other sectors are in doldrums. The big retail can’t stimulate business activity in general”, he says.
“Retail does not manufacture new products. Employment generation happens only when new products are made. Employment generation by big retail chains is a mirage”, argues Mr.Krishnan Nair.
He believes that unless Kerala is granted special status like Jammu & Kashmir, it can’t claim immunity. When traders opposed the retail initiative by Reliance, it was stuck down by the industrial tribunal, Mr.Immatty points out.
A report on the impact of organised retail on unorganised retailers, prepared by Indian Council for Research on International Economic Relations, said unorganised retailers in the vicinity of organised retailers experienced a decline in their volume in initial years. Small retailers want to be more competitive and have been extending more credit to attract customers, but only 12 per cent of unorganised retailers have access to institutional credit, the report said. The report also cautioned people against collusion and ‘predatory pricing’. A parliamentary panel on FDI in retail made several significant observations. “Consumers’ welfare would be sidelined, as the big retail giants, by adopting a predatory pricing policy, would fix lower price initially, tempting the consumers.
After wiping out the competition from local retailers, they would be in a monopolistic position and would be able to dictate the retail prices. Local manufacturers, in particular the small scale industrial sector, would be gradually wiped out.
Procurement centres constituted by big corporates for making direct bulk purchases would initially pay attractive prices to farmers and cause gradual extinction of mandis and regulated market yards. Then on, the strength of their monopolistic position, farmers would be forced to sell their produce at rock bottom prices”, it said.
Even as disapproval from expert panels and dissent from the trading fraternity persist, there is a large crowd waiting outside modern malls in Kochi. Hundreds throng these outlets for a pleasant shopping experience.
They have also become a favourite rendezvous of teens. And, if a large crowd is ready to take the plunge, none can prevent the arrival of biggies in retail, even if it costs the livelihood of small retailers on the other side of the road.