Ajit Balakrishnan: Trying times at Patel Stores

PEOPLETECH

At the southern tip of Bombay, where Colaba Causeway meets Wodehouse Road, wedged between Flashman Cleaners ("Curtains, Carpets, our Specialty") and Teenage Library, is Patel General Stores. Across the road is a taxi stand, where half a dozen taxis are lined up. The taxi drivers chew paan, gossip and share an easy camaraderie. They are refugees from the jobless small towns of eastern Uttar Pradesh. Baba, a tan dog they have commonly adopted, lounges around, too, waiting for scraps of food. On rainy nights, the taxi drivers let Baba sleep with them in their taxis. The taxis too are their home while they wait to earn enough to afford a share of a room in Murthy Nagar, the vast slum that is home to the drivers, shop boys and dhobis and domestic helps who serve wealthy Colaba and Cuffe Parade.

This corner is a good place to observe the gigantic forces now sweeping through the world and being hotly debated in academia and halls of parliaments: globalisation, privatisation, digitisation...

But if you asked the taxi drivers lounging here, or the ancient proprietors of Flashman Cleaners, or the two cousins who run Teenage Library or young Chetan Patel, who manages Patel General Stores, you would probably be greeted with blank looks. They wouldn't even know what these words meant, let alone connect themselves to these waves of change.

Take the two cousins who run Teenage Library. When I first encountered them in the early '80s, with a fifty rupee deposit and a charge of a rupee or two per week you could borrow Mad Magazines or Archie comics while young neigbourhood housewives borrowed Mills and Boon novels. When the first whisper of media digitisation arrived, Teenage Library was at its leading edge renting out video tapes of Bollywood movies and American shows like "Cheers". When satellite television came roaring in carrying "Cheers" and "Three's Company" on TV for free, they deftly switched to renting out DVDs of hard-to-get award-winning movies. Now, video download services threaten but I am sure they will have a response for that too.

Or take Patel General Stores with its six-foot-wide front and that ten feet deep. You stagger to the bathroom mirror one morning, reach out for your shaving cream and find that you cannot squeeze another drop out of it. That's when you call Chetan at Patel General Stores and before you have finished stroking your emerging double chin, the door bell will ring with a young boy carrying the shaving cream.

But this happy subsistence-oriented economic system in this corner of Colaba has of late had to deal with an ominous move. A Sahakari Bhandar outlet, a dozen doors away, which had provided sleepy but manageable competition, has suddenly sprung to second life. It's been acquired by a major business house and wiped of the dust from its shelves. And it has started an aggressive price competition. Local customers have started switching their monthly purchases of rice and dal and salt and haldi already to them. Patel General Stores' business model and that of 11 million other stores like them in India are going to be even more reliant on fleet-footed young men dropping out of school in rural areas. What may be at stake here may also be a system that currently serves as our economy's shock absorber as farming families, unable to support themselves, take their young sons out of school and send them to earn a living in the retail trade in cities.

It's comforting to know that we are not the only country that has had to deal with this transition from small, labour-intensive, high transaction-cost retailing to efficient, low transaction-cost, large-scale operations, but we may be one of the few that's dealing with it simultaneously with some other mega transitions like the one away from agriculture, the one away from small-scale industry.

At one extreme of the retailing transition is the United States with 80 per cent of all retail now in the hands of large-scale retailers. The pain of transition in their case was bearable partly because the growth of large-scale retail in its first round happened in the newly booming suburbs of America in the 1950s and 60s. City retailers escaped these pressures for a long time. But even in America, the battles are far from over. When Wal-Mart attempted to open its first store in New York recently, a noisy coalition of corner stores, green activists, neighbourhood groups, and labour unions thwarted them. So New York lives even today without a Wal-Mart store.

Then there is the case of France. In the 1970s, as the giant retail formats started becoming popular, the French parliament passed a law that required retail outlets with a sales area larger than 10,000 square feet in urban centres to get approval from a local board of citizens composed of self-employed shop keepers, consumers and local politicians. Refusals can be appealed to a national level board. This is what has kept French cities so charming and perhaps also the reason why things cost so much in France.

Last week, we were strolling through this world when we noticed Chetan step out of his shop on a busy morning to feed a biscuit to Baba, the taxi-drivers' dog, which had been waiting hopefully with a mildly wagging tail for his morning meal.