Mom & pop stores shall rule 84% of retail till ’13

Icrier study says they have been able to adjust to the emergence of organised retail 
Their spoils will reduce, but negative impact will wear off with time 
Report to be submitted on Friday

NEW DELHI: Allaying fears of mom & pop store owners, a study by the Indian Council for Research on International Economic Relations (Icrier) has found that the unorganised sector will retain around 84% of the retail market till the year 2013.

The share of the unorganised sector will come down with the advent of large-format stores, but any negative impact will wear off with time, the think tank has indicated in the largest study so far on retail sector in India.

The study would be submitted to the government on May 9.

Icrier was commissioned the study early last year after the Prime Minister’s Office (PMO) directed the commerce and industry ministry to get an assessment done on the impact of organised and big retail on the smaller mom & pop stores.

Pointing out that organised retail does not have an adverse impact on intermediaries, the study found that unless retail trade is modernised, bottlenecks would continue. Another key recommendation is that the government should rationalise licensing norms to encourage growth of organised retail.

The Icrier study does not talk about the role of foreign direct investment in the retail sector, but is only an assessment of the impact of organised and modern retail on mom & pop neighbourhood stores.

Around 2,000 mom & pop stores and 1,000 consumers across the country were surveyed for the study.

One of the most important findings of the study is that mom & pop stores have so far been able to adjust to the emergence of organised retail and malls.

Comparing regions in the south (where organised retail has been around for long) with those in the north (where organised retail is a very recent phenomenon), Icrier has concluded that the impact of modern retail on the profitability of small stores wears off with time.

This finding is interesting since large players, particularly Reliance Industries’ fresh fruit and vegetable outlets, have been a target of protestors alleging such stores snatch the livelihood of small traders and kirana stores.

Icrier has also found that none of the small stores are affected by organised retail to the extent that they want to move out of this business. Even a large majority of the next generation of those owning mom & pop stores have said that they want to remain in this business, despite the advent of organised retail. Then, even customers appear to favour the existence of big guys, saying they would like both organised retail and mom & pop stores to co-exist since they derive value from both. Very few of those surveyed wanted one of the two formats to go.

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