Amdavadi 'kirana' shops wary of FDI in retail

Even as the Narendra Modi-led Gujarat government continues its rhetoric against the Foreign Direct Investment (FDI) in retail, the question is whether these international retail giants really take away the business of kirana stores?

The grocery stores are afraid of losing business to retail giants while experts believe that international retail chains pose no threat to grocery stores, and they will in fact, increase employment and customer will get better service and quality at lower prices.

Similar fears were raised a few years ago when Reliance, Tata, Birla and other corporates forayed into organised retail. Within no time, the corporates opened stores across the country.

However, contrary to the fears, not only did the kirana stores survive, many of them were able to expand their business.

In fact, the organised retailers have had to shut a number of their stores as they simply could not match the personalised service offered by kiranas. The retailers could not match the ability of a kirana store to provide groceries on a month’s credit to customers.

Retail market experts see no reason why kirana stores will have to down their shutters. Dr Rakesh Bhavsar, management consultant who has also studied retail market in US believes that grocery or convenient stores will not shut down.

“Customers usually go to malls or supermarkets to buy 15-day groceries. And the same customer goes to convenient stores to buy items in smaller quantities. In a nut shell, the quantum of business of grocery stores will certainly come down but, they will not close down. On the contrary, their profit will rise,” he said.

However, kiranas are afraid of being wiped out of business.

MNCs will buy products in bulk at cheaper rates compared to small retailers. How will the small retailer face competition from them? The poor families who buy grocery and other items on credit will have to suffer or they will end up paying much higher rates,” says Kamlesh Shah, secretary of The Ahmedabad Grain Merchants Association.

Arvind Patel, vice president of Ahmedabad Retail Grain Merchants Association agrees that kirana stores will need change for survival. “There will be stiff competition as and when MNCs enter the Indian market. Local retailers will need to modernize their store. They will have to opt for better display compared to shabby shops at present. Moreover, local retailers will have to match their price, service and quality of product,” he says.

The middlemen has at least 50% share in any product, said Dr Prodipta Sen, VP- Marketing, corporate affairs & retail, Alpha G Corp, which has developed Alpha One Mall. “Wal-Mart has already started working with farmer co-operatives in Punjab, which has enabled customers get price benefit, while farmers’ margins have risen. This will eliminate middlemen who eats huge share of customer as well as producer,” he said.