Political opposition temporary: Retailers

Talk to R Subramanian, the managing director of Chennai-headquartered retail chain Subhiksha, and he will tell you that he has no intention whatsoever of cancelling the roll-out of 120-odd stores of his supermarket and pharmacy chain in Uttar Pradesh.

Or ask Reliance Retail executives if they will skip Uttar Pradesh and West Bengal, the two states where the company's outlets were attacked last month, and they will tell you they are still gung-ho about the two states.

So far, retail chains have learnt to grapple with three problems "" skyrocketing real estate prices, high attrition rates and inadequate purchasing power.

Now, a fourth element, political opposition at the local level, has been added.

On their part, retailers are comforting themselves by identifying the recent roadblocks as temporary fallouts of local politics. "This is not about ideology," says a Reliance retail executive. "The government "" central or state "" is not against organised retail. That is the good news," said Subramanian. What is worth noting is that the backlash against organised retail started only after Reliance Retail entered the market. Stores like Spencer's, Food Bazaar and Subhiksha have been in business across the country for much longer. And all the three chains thrive on the high-volume and discounted-price model.

Similarly, protests have targeted Wal-Mart which has tied up with Bharti for a cash & carry venture, though the German retailer Metro AG has had operations in the country for a while. Industry experts said that this is because of perception, resulting from the size of the operations of these companies. Wal-Mart is the world's largest retailer and is famous for cornering the market with rock bottom prices.

"Our concerns are equally valid for big Indian companies entering the retail sector. Without proper regulations and safeguards in place, big Indian companies should not be allowed to operate in this sector," said CPI(M)'s Nilotpal Basu.

The Bhartiya Janata Party has set up a committee under former president Murli Manohar Joshi to look at the implications of large Indian business houses joining the fray. "We feel that existing employment should not be disturbed, while admitting that some retailers may be indulging unfair trade practices," said BJP spokesperson Prakash Javadekar.

The political opposition has spread from Kerala to Uttar Pradesh and West Bengal. In most cases, the attacks were led by representatives of political parties.

Still, it has been significant enough to galvanise some states into action. The Kerala government has expressed its reservations on the proliferation of organised retail in the state. A few officials have gone as far as saying that they will not allow Reliance Retail to function in the state.

Uttar Pradesh might put a cap on the number of shops that a retailer can open in a city. This could adversely impact domestic retailers' ambitious plans of being in almost every other neighbourhood. Cities could also be divided into zones, whereby there could be a ban on organised fresh produce and grocery shops in close proximity to local traders.