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The story of organising retail

Traders are still apprehensive about big retail, but organised players from Reliance Retail to Walmart are eager to forge alliances with them

retailers
Nivedita Mookerji New Delhi
5 min read Last Updated : Jan 03 2024 | 10:14 PM IST
Almost 10 years ago, traders had their moment when they gathered at Delhi’s Siri Fort Auditorium. It was a full house on February 27, 2014, just weeks before the general election. The keynote speaker was Narendra Modi, then Gujarat chief minister and the prime ministerial candidate for the Bharatiya Janata Party (BJP). The celebratory atmosphere that morning had stood out for BJP’s stand on retail — ranging from foreign brands and e-commerce to corner stores or kiranas.

Speaking at the national convention of the Confederation of All India Traders (Cait), Mr Modi had a decade ago highlighted the importance of technology in retail. Traders — known to be BJP backers and opposed to foreign retail chains such as Walmart—were taken by surprise when Mr Modi encouraged them to accept modern technology, emphasising that doing so would not only boost sales but also enable them to compete with foreign players. At that point, he had left the traders guessing about the BJP’s stand on foreign direct investment (FDI) in multi-brand retail if the party came to power, especially since the Congress-led government at the time had allowed 51 per cent foreign investment in the sector three years prior.

Ten years later, it looks like a good time to take stock of the retail journey. First things first, the BJP government didn’t disappoint traders and kept the multi-brand FDI policy in abeyance all through. Against that backdrop, numbers shared by traders tell a story of its evolution. At the end of 2013, and ahead of the 2014 elections, the retail industry in India was worth around Rs 90 trillion. Of this, only 3 per cent was organised, and the remaining unorganised. Traders have a better name for it— “self-organised” rather than “unorganised”.

By the end of 2023, the retail industry’s revenue figure had crossed Rs 140 trillion, with the organised sector comprising 7 per cent of the total. In 10 years, organised has inched up from 3 to 7 per cent. It’s tough to say whether the presence of foreign retail would have carved a different trajectory for the organised vs unorganised story. Traders believe foreign retail, whether in brick & mortar or online, can never help them. Their ongoing tussle with Flipkart (now majority-owned by Walmart) and Amazon is testimony to their differences with foreign majors.

Ten years after that Siri Fort meeting, they are equally apprehensive about all big retail, Indian or foreign. Those, who have a say, don’t shy away from pointing out that big retail is not conducive to small businesses. One such voice is of Praveen Khandelwal, national secretary general of Cait. “They want to monopolise retail trade in their favour,’’ he says about big retail with some authority. That doesn’t mean small traders or kirana stores don’t want to be mainstreamed or be organised. They are betting on the muscle of thousands of trade associations around the country to help them get organised. However, there’s a brighter chance of the muscle of big retail enabling traders to get organised faster. A meeting of the core group of traders in Nagpur was scheduled for January 3 to discuss ways of empowering the unorganised retail in the country.                           

Now, looking ahead to the next 10 years through a bit of crystal ball gazing, the retail industry in India could touch Rs 200 trillion by 2033, guesstimates suggest. Of this, traders are expecting 50 per cent of the business to get organised. Supply chain management, e-commerce integration, regulatory compliance, and consortium/cluster approach have to be in play to take the organised pie from 7 to 50 per cent in the next 10 years.

But here’s a twist. Despite all the enabling points from supply chain management to consortium approach, big retail is eyeing the perks of getting the industry organised. Whether it’s Reliance Retail, Amazon or Walmart, forging alliances with traders and small businesses is increasingly becoming important. Earlier, it may have been for optics, but now it means business.   

Big retail, on its part, admits that kirana stores are its real competition, much more than foreign majors. Even so, big retail wants to be the backend enabler for small traders and kiranas. The estimates shared by big retail vary a bit from the numbers that traders put forth. Around 12 per cent is organised retail currently, according to a major domestic player, and it expects the industry to be fully organised in 10 years. The biggest retailer at that point could get as much as 50 per cent of the total industry pie in terms of its involvement in the retail industry, including through tieups and deals with small traders.

Whatever the numbers, the retail landscape sure is getting ready for a reset, with or without FDI.

Topics :BS Opinionretail marketReliance RetailWalmart India

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