Wal-Mart, Tesco are different

NEW DELHI: With the PMO calling for a study to assess the impact of large retailers — be it foreign or domestic — domestic retailers are trying to distance themselves from their foreign counterparts. Clearly not very happy at being tarred with the same brush as international chains, they say they should not be treated at par with the likes of Wal-Mart and Tesco.
Domestic retailers are quick to point out that Wal-Mart, with its ability to scale up can manipulate the consumption pattern in the country. Says Future Group MD Kishore Biyani: “The implication needs to be understood in the long term. In terms of size, Wal-Mart is bigger than the total consumption in India.

Operating at this scale, puts the company in such a commanding position, that it can even manipulate consumption patterns, something which is obviously not in the best interest of India.”

Echoing a similar view, the head of another prominent retail company says that the franchising agreement with Bharti for front end-retail is only the beginning.

“My whole fear is based on the assumption that even if Wal-Mart opens stores in a franchisee model, it will subsequently force the opening of FDI in the country. And once it is able to bring its own equity, it can manipulate the markets on its own terms and conditions,” he said.

These views, are however, not shared by all large domestic retailers. “What’s the big deal if Wal-Mart or other foreign retailer does business in India. If the Indian players are competitive enough, they will survive the war.” On the issue of impact on small retail units, he said, “Let that choice be with the consumer. Everything should not only be judged from a businessman’s perspective.”

Small retailers debunk the contention that a distinction should be drawn between big domestic and foreign retailers. Says Confederation of All India Traders (CAIT) secretary general Praveen Khandelwal: “PM’s intervention, though late, is necessary.

At the same time, the proposed task force, while studying the impact of the likes of Wal-Mart on small shops, should not ignore the fact that Reliance, Birla and Bharti are as big a threat.”
Other Wal-Mart sympathisers also feel that the arguments being extended by the anti Wal-Mart lobby lacks substance. “Even the PM’s letter fails to explain if the debate is between a big retailer versus small retailer, or between a foreign retailer versus domestic retailer.” says a retail expert.