National retail policy on the backburner

Icrier study shows biggies don’t quite worry mom & pop stores

NEW DELHI: The Centre may well have pushed a comprehensive national retail policy on the backburner. Going by sources, it would rather not court fresh controversy on sensitive issues - and the small-versus-large stores issue sure is an emotive one - at this point in time.

An obvious consideration is the increasing likelihood of the country going into general elections ahead of schedule.

But, more importantly, the preliminary findings of a study conducted by the Indian Council for Research on International Economic Relations (Icrier) have shown that small stores have been able to adjust to the emergence of organised retail.

Earlier this year, following directions from the Prime Minister’s Office, the commerce and industry ministry had mandated Icrier to conduct a study on whether the entry of large retail players would have any impact on the smaller, mom-n-pop stores.

A comprehensive national retail policy was supposed to draw from the findings of this study.

Icrier was to submit its study to the government by August, but it got delayed because the think-tank was asked to broad-base it after a preliminary presentation was made to the Department of Industrial Policy and Promotion (DIPP).

“Now, the field surveys are over and the findings are in. The study will be submitted to the government by the end of November after a peer review exercise. This exercise is meant to make our processes more robust,” Icrier director and chief executive Rajiv Kumar told DNA Money.

Icrier, it is learnt, has come out with three key findings.

The most important one is that the mom-n-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 that such stores snatch the livelihood of small traders and kirana stores.  The second finding is 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-n-pop stores have said that they want to remain in this business, despite the advent of organised retail.

Customers are not against the existence of big guys, either, and would like both organised retail and mom-n-pop stores to co-exist, since they derive value from both. Very few of those surveyed wanted one of the two formats to go.  About two months ago, DIPP had asked Icrier to find out ways in which the unorganised sector could have access to easier credit and perhaps look for alternate models of doing business.

The DIPP asked Icrier to broad-base the study after the CPI(M) raised these issues in its proposal on the National Retail Policy.