Wednesday, October 03, 2007

Tale of Retail

Finally Reliance has decided to close its Reliance Fresh stores in UP and Orissa and move out. I don't know about Orissa but in UP this step was taken after protests and vandalism at Reliance Fresh stores in some cities. Mayawati Government ordered closure of some stores citing 'law and order problems' and gave the local administration in all the cities to order closure wherever they felt any such incidents might occur.

Considering that Lucknow had highest first-day sale as compared to other Reliance Fresh stores across country, this move undoubtedly costs Reliance heavily. What I am not able to understand is why only UP ordered this mass closure, leading to exit of the company?

I understand the concerns of smaller retailers, but I believe that these concerns are not limited only to UP businessmen. Losing customers to big retailer is a problem for shopkeepers across country and there have been protests everywhere, but no other government saw such a massive 'law and order' problem and ordered closure of stores. Whereever required stores and employees were given proper police protection, till the protests cooled off.

Will Government behave in same manner when Reliance or Bharti-Walmart come calling with their retail chains? You bet it will and the lame approach it has taken will only encourage the self-appointed protectors (read local politicians and their goons) of shopkeepers' interests to behave in a more violent manner and polotical armtwisting. But may be this won't happen, simply because these companies won't bother to come to UP at all! There are 25 other states to go!

OK, I am not so much bothered about big retailers, but yes I am miffed with treatment extended to R-Fresh. Everyone understands that declining trend in Agricultural sector can be reversed only if this sector becomes organized and entry of retailers is the only way this was going to happen. Reliance has invested heavily in setting up cold-chains across country and equally on transportation and sale of perishable goods, like vegetables and fruits. This will lead to lesser wastage of food products, a task Food Corporation of India has never been able to do and which is not possible without private funding. The farmers get much better price of their produce and we the consumers get the stuff at lower prices. The local sabji-waala suffers but only for a short-term when spill-over customers start flocking him again. And if he is thela-waala then it gets even better. (Also in Hyderabad, I have seen some small sabzi-walas buying from R-Fresh stores!)

I have witnessed this in Hyderabad, where Reliance Fresh stores debuted. And do you know who is the most stiff competitor of Fresh stores here? 'Fresh @' stores from Heritage, an A.P. Government enterprise, till now in milk and milk-production cooperative business. And I don't know of any protests from anyone here.

Frankly, I see this feet-dragging approach by U.P. Government a politically motivated step and I am afraid that Government will do so, whenever any corporate comes to establish any business in U.P. I remember a Shell project being dumped near Allahabad. Anil Ambani's Dadri project has run in rough weather. With such an unfriendly attitude towards private industry, I definitely believe UP is missing the bus to modern trends which are becoming norms all over the country now. Hum to aise hi hain 'Bhaiya'.


Vaibhav said...

yes, this is really a matter of concern. If things keep on going in this way, I guess we have to forget about development. Now there are n no. of concerns where these government are not supporting ppl, those can be retailers, can be IT itself.

danu said...

well written :) ...but I really doubt the sabzi wala can handle any setbacks ... mostly these guys dont have a lot of buffer to actually handle competition from r-fresh. And this is not the first time something like this is happening...machines replace ppl...big retail chains kills small scale shops ...nothing new and not specific to India alone ... this is the price we have to pay for 'progress'.

Amal said...

Good piece Sir. If we look at the big picture then the retail revolution is gud for India. But UP is Ultra-Pradesh. When every state is going for modernization "behenji" is busy in idiotic things like these. There is so much talent and opportunities in UP but people know UP only for bad things.

Lets hope for the best.