The Great Indian Retail Business

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Since the beginning of time India has been the land of the intermediaries. There are more people in this country who make money being the intermediary in a business than those who do by adding real value to a business.

What is the whining and howling that the modern retail stores killing the Mom and Pop stores all about? In the end through several surveys and studies, it has been clearly established that even at the current pace, the modern trade is going to only be having only 10% of the pie. Despite this the howling continues... Let me tell you its not the small stores that are creating the noise, but the intermediaries, the guys with the financial might who go to the press. The issue here is that the intermediaries make money due to the scale of their operations, and they have fewer people to serve in the event that a store such as Wal-Mart becomes a part of the Indian retail landscape, which means, much less turnover for them.

I say the Wal-Marts should become the new intermediaries. They have the economies of scale. If we take the case of the Indian farmers; a large retail company can cut a long term deal with the farmers for purchase and management of their produce which they pick up at an already agreed upon price. This relieves the farmer of a lot of worries, their produce is managed the right way, they are assured a sum for their produce and it also create greater efficiencies within the system (Less wastage of stock, Better pricing due to reduction of intermediaries, etc.).  These efficiencies will then be further passed down the system.

If the general trade stores were to buy their requirement from these large retailers (sort of like the cash and carry businesses but on a much larger scale). This would in effect be the entire supply chain turned upside-down. The large retailers actually supplying to the smaller ones and making the entire system more efficient and beneficial to all parties involved.

The question raised would be - Wont these large retailers become monopolies? The answer is to open up the sector, let one and all participate and let us see who comes out the winner. What is the problem if someone is better that all the rest? If someone can monopolize despite the entire world of investors and businessmen knowing the idea, then so be it.

I am sure that this is not the course that India retail is going to take, but would it not be awesome if this sort of a solution could be worked out? If general trade store could be branded under a retail major, where each retail major competed with the other. It would finally be the customer at the top.

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