Though a decade of Big Bazaar and Spencers hasn't affected small shopkeepers, most are wary of FDI in retail distorting the market
Rahul Agarwal (name changed), a grocery shopkeeper in South Kolkata, buys half his monthly inventory from German wholesale store Metro Cash & Carry. With a quarterly shopping bill of about Rs 2 lakh, he earns points that translate into cash benefits of Rs 18,000 every quarter. Not surprisingly, Agarwal loves to shop from the store’s tall fixtures, their topmost levels accessible only through lifts.
Early mornings are the busiest at the Metro Cash & Carry complex. Three-fourth of the morning trade is carried out at about 8 am, though the store’s portico remains abuzz with those loading daily provisions purchased by shopowners, traders and restaurant owners. These three categories pretty much exhaust Metro Cash & Carry’s list of customers.
There are some who come to the store to see its grandiose structure, spread over about 1,00,000 sq ft, as well as the variety of goods on offer. “A lot of my friends want to come with me to see the store. One person is allowed to come with a trader who holds a licence to shop here,” says Saihuddin Mondal, a shopowner from Sonarpur in the fringes of the city. Mondal’s shopping bill stands at Rs 1-3 lakh every quarter.
Rajesh Purohit, the store manager, quickly clarifies, “Those accompanying Mondal are also shopkeepers.”
Till recently, retail was out of bounds for companies like Metro Cash & Carry. Though the Union Cabinet has approved foreign direct investment in multi-brand retail, in Bengal, it may never see the light of day.
Agarwal and Mondal are happy; they represent the business segment West Bengal Chief Minister Mamata Banerjee is fighting to protect from what many say would be an onslaught of foreign companies. Opposing the Centre’s move, Banerjee had withdrawn support to the United Progressive Alliance government. The state government has also passed a resolution in the state assembly against domestic capital and foreign direct investment in retail.
Agarwal and Mondal have reasons to resist the entry of the likes of Walmart and Carrefour in India. Ever since domestic retailers such as Spencers, Big Bazaar and More opened outlets in and around Kolkata, Agarwal lost almost all his high-value customers. However, thanks to the ever-growing population, his profits haven’t declined. “People who bought groceries worth Rs 7,000-8,000 every month from our stores now prefer to buy from retail outlets. Our profits are stagnant, but volumes have increased, as the number of customers has risen,” he says.
Traditional wholesalers doing business in the Burrabazar and Posta Bazar areas for about 50 years see Metro Cash & Carry as a rival, albeit a weak one. Sitting in a cramped shop in a narrow alley at Posta Bazar, Banwari Lal, a wholesale spice trader, says his business hasn’t seen much change since Metro Cash & Carry started operations in the city. His profits have not risen much, nor have those seen a substantial fall. Though he lost some buyers in the south Kolkata region, where Metro Cash & Carry is located, this was compensated by the rise in customers from other parts of the city.
Pricing is the key to the co-existence of organised and unorganised wholesalers. While traditional markets like Posta and Burrabazar offer better prices, new-age wholesalers like Metro Cash & Carry offer convenience. “We get some food articles such as cardamom at Rs 600-650 a kg at Burrabazar, against Rs 850-900 here,” says Agarwal.
Another area in which traditional markets score over organised stores is credit facility. “Banks do not lend to shopkeepers. Most wholesalers in traditional markets offer credit facilities to old clients. This is a big advantage,” said Sushil Poddar, general secretary, Confederation of West Bengal Trade Association.
A decade of the presence of organised retailers like Big Bazaar and Spencers hasn’t affected the business of small shopkeepers, says Poddar. There are about 10,000 small shopkeepers in Kolkata and the three adjoining districts of Howrah, North and South 24 Parganas, with a daily turnover of about Rs 9 crore, according to Poddar’s estimates.
Yet, he remains steadfast in his opposition to foreign direct investment in retail.
“Organised domestic retailers are welcome. However, once foreign retailers come, their marketing methods will be so different that they will distort the market,” Poddar says.
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