Walmart
By Ranbir Singh
(CHAKRA) The recent furore against allowing Wal-Mart and other western multinational companies into India ’s lucrative retail sector is based upon fears that it will bankrupt the small retails who have been at the hub of that country’s consumer sector. There are fears that these small family run businesses will be unable to cope against the titanic behemoths which will use their financial muscle, supply chain and political influence to destroy all competition. Wal-Mart has been severely criticised for doing just that in its home ground of America .
Family run outfits, typified by the mom-and-pop stores, have been ravaged out of existence by the aggressive tactics and predatory pricing of Wal-Mart. A similar story is found in Britain where farmers have had their profit margins squeezed to the absolute minimum. Local shops have gone under, unable to compete against the superstores who have now opened their own Metro stores in the very same areas where the small village style shop was once trading. All over Britain and in many small American towns, the once vibrant retail sector has all but been diminished by the activities of the faceless corporate leviathans. Urban centres lie decaying save for fast food eateries, pubs, nightclubs, pawn brokers, and establishments specialising in catering to those addicted to gambling and sex. These are the only places, along with the supermarkets, actually making a very nice profit in the midst of a global economic recession.
Hence one can understand the opposition to Wal-Mart and other such companies setting up shop in India . But pricing is merely one aspect in the success of such places. Wal-Mart grew because of its emphasis on the customer. The same focus on customer service is evident in stores such as Asda, Tesco and Sainsbury in Britain . In India shopping remains a lowest common denominator process of handling cash in exchange for goods. Unless the person knows the vendor the customer cannot even be sure of getting a good price for what are often ubiquitous piles of rotting vegetables and vermin infested goods.
Customer service is only available to the wealthy as opposed to brusque and often dismissive manner in which the much vaunted street traders deal with India ’s mass consumer base. A protected economy breeds apathy, lack of innovation and above all an incredible level of arrogance. In a country like India where the social and political system favours the small ruling elite over the masses, the kleptocratic neo-colonialism saturates all thinking so that those with even the smallest amount of power leverage ensure that it is used. So it is not surprising that lack of customer service abounds along with bad quality goods, inflated prices and where the word ‘refund’ is not even in the traders’ vocabulary.
In such an environment it is simply impossible to enforce any semblance of trading standards where customers are at the mercy of merchants who feel that they are actually doing them a favour by even letting them buy their substandard produce and consumer goods. At the polar end of the social scale those with power and status, especially if they are part of the ruling kleptocracy, benefit from slavish sycophantism where all their petty needs are catered for. Yet this is also not customer service but a hangover from a feudal pre-modern past where servants put shoes on for their masters, made the tea, or chased away the peacocks. Is this the image of a rising nation which India wants the world to see
Customer service is a peculiarly western phenomenon. Taken to extremes Ayn Rand’s philosophy of Objectivism is harsh and unforgiving since it takes the view that as we are all inherently selfish then only be making selfishness acceptable will we build a better world. Yet there is an element of truth in this. Wal-Mart and other companies are selfish in that they want to make a profit so there is no difference at this level between them and the street trader. But while the latter views and treats the consumer base in an unforgiving predatory manner, the multinational realises that to compete there must be something extra. Customer service makes that simple handling of cash for goods an important shopping experience even more so than predatory pricing or strategic merchandising.
The multinational supermarket knows that the customer will return if treated in a respectful manner as well as finding all their consumer goods at an affordable price, of good quality and all under one roof without being constantly pestered by the merchant for simply trying to browse. Even when Indian stores try and emulate the western example, this inability to ensure the customer has the freedom to browse often takes the form of being followed around by a security guard who views every customer as a potential thief. They can even take them back if the goods are faulty or if they are dissatisfied.
One of the reasons why Amazon has done so well is not just on price but this high level of customer service. Without even having a store to browse Amazon offers its customers an array of consumer goods which can be delivered to the door, returned and even offers to rectify its mistakes to its own immediate economic detriment, not to that of the consumer. While book shops in particular have become very embittered by Amazon, it must be remembered that in the not too distant past cartelisation ensured book prices were fixed to the detriment of the British book lover.
In India the consumer is faced with an array of retail outlets which unless known to them personally offer nothing but cartelisation of bad quality products at amorphous prices. So perhaps the entry of Wal-Mart and others should be encouraged as it will encourage not just competition but a consumer culture which will raise standards of trading, quality, merchandise and actually deliver the customer service which is all too lacking in India’s retail sector.
Long-term this liberalisation of retail will in fact benefit India . Abroad, Indians not only do well in retail but have influenced it in ways which India itself has yet to recognise. Expelled from East Africa from 1968 by despotic regimes which viewed them as being of the wrong race, Indians arrived in Britain will little more than one suitcase. Yet it was the very family run corner shops which revolutionised the shopping culture, being a lifeline for essential goods during late hours and all day Sunday when even the supermarkets were shut and it was illegal to trade. Through dint, hard work and a barrage of fines these Asian shops did as much to change British consumer culture as curry houses did to the nation’s easting habits. For anyone who now takes Sunday trading as normal it is very difficult to hark back to those Dark Ages of no shopping, save for the Asian corner shop.
The arrival of Wal-Mart will ensure that India ’s own indigenous retail sector will be forced to make changes which will make them more competitive. Right now almost half of India ’s food goes to waste. Under British rule famine was accepted as the norm by the colonial rulers who did very little to increase food production while concentrating on cash crops such as cotton which would benefit the imperial power. After independence great strides were made to tackle hunger and malnourishment. The Green Revolution made Punjab the richest state and also ensured that India was self-sufficient in food. But this did not tackle the inefficient supply-chain system and ranks of middlemen who exploited the farmer much more than any multinational.
While ensuring a tidy profit for themselves, a host of merchants and petty government officials have helped to impoverish millions of Indian farmers to the brink of suicide, while passing on the inflated costs to the end consumer. Is this what the anti-globalists want to ensure India retains? Is this a system any Indian can be proud of? If anything the entry of Wal-Mart will allow India ’s own merchants and traders to see how a successful business is built without wastage of produce and goods, and without imposing needless extra costs. If India is to join the modern world then it needs to act like a country in the twenty-first century and not a failed state that is barely out of the eighteenth.
When one looks at how Indian companies are prospering abroad, such as by taking over the manufacture of British motoring icons like Jaguar cars or ironically even the original East Indian Company which is now owned by Sanjiv Mehta, an Indian born entrepreneur , shows it’s not just a simplistic case of India becoming just another hunting ground for Wal-Mart. In time too Wal-Mart’s home country can be revitalised by Indian companies. That is the rules by which free trade works and in their opposition to the entry of foreign retail, the BJP and others need to realise this.
The author is a contributor and member of HHR
A good article, but customer service is cultural not a product of big business – the variations in customer service levels within europe, with essentially the same organisations in play demonstrates that. In addition – the costs to society, which to be fair are described first, vastly outweigh the benefits – india has benefited for a longtime with large amounts of its cash circulating around the masses, without having profits sucked upwards to a stockholding economic elite. Hindu’s, reveiled for the spiritually based “Caste” system may not understand a financially classist society, or economic slavery and are easy prey to those who have no concept of propriety other than the profit motive.
Hi,
Very well said, I enjoyed the article.
Every retailer in India or abroad has same principle of business – a single goal to make profit. Why only the retailers?? Any business involved into trading or production of goods exists to make money. And who would like to reap profits after investments (money + hard work) made.
Here Competition is important, how cartelization killed, also how the FDI investments are governed well and policies framed with riders like equal investments made building up infrastructures like large Food storage sheds / godown’s, transportation, cold chains and ensure we do not waste any agricultural crops – may it be perishable (fruits and vegetables) or non perishable (food grains) along with the investments made in front end for the consumers to increase the consumption. Innovation and higher consumptions would bring down the wastage’s in food crops. We need money for infrastructure development. High yield technology to feed ourselves no human in India remains starved and to feed rest of the world.
A well regulated / monitored FDI investments going to be the key success factor. We must ensure that, the taxes paid by the retails and the investments made are used for India’s progression in terms of infra and technology. Larger benefits not to be ignored, must realize the employment too. An average super market / hyper market of 60000 – 100000 Sq. ft. employs direct employee’s to a tune of 110-150 people a minimum and indirect employment to another 100-150 peoples, transporters, Security, Housekeeping, banking, traders, utility services etc..
We should not worry on “Pop and Mom” stores they would equally be benefited and grow, they can buy merchandise large Cash and Carry stores anytime in any quantity rather than waiting for the distributor based networks delivery on specified days to reduce their stock outs. They have key “USP – Credit” which am sure no MNC / large retailers cannot afford to offer until have specific customer friendly policies like Credit cards offered by these retailers.
Every town / city have peculiar consumers / end users, one who buys only from main wholesale markets on monthly basis where they get all commodities are reasonably lower than printed prices- top ups from local kirana’s, some buy only from local kirana’s on cash / credit, a mix of consumer who shop from only large format stores, rest some a hybrid of these. Kirana’s will co-exist by all means, possibly giving risky proposition for the new entrants (kirana stores).
With increase in competition, there would be fair trade practices thereby would bring down the middle men in trade currently ruling the market, hence reduction in prices at each stage. At least you would start paying right price for the quality stuff.
Even after allowing MNC’s to get into retail territory “Choice is with you” to let them flourish or to die (enjoying yourself with current set of kirana stores / Indian retailers)
Over all a Win – Win situation for everyone.
I live in America, and the big retail companies like Walmart have ruined the health of the nation’s people.
The same thing will happen to India, when these companies flood the Indian table with cheap, tasty foods that are made with the worst ingredients, salt, sugar, white flour and fat, in thousands of combinations.
Let’s not forget the cheap foods made with genetically-modified things like corn, too.
Recently the United Nations conference in New York confirmed that two thirds of all deaths world-wide were due to ‘way of life’, and by 2030, these deaths will be 5 times more than deaths from tuberculosis, malaria, and AIDS.
In S. Africa, now 1 in 4 school kids is obese or overweight, and so are 60% of the women and 31% of the men.
I’m sure these companies will ‘smooth the way’ with many bribes to many Indian officials, who, for the short-term profit, will allow in the destruction of the country’s health, with all the problems and expense this brings.
The for-ever hungry corporations are reaching to all places they can now, as domestic markets are exhausted, and people in America turn to local, organic foods more and more. Also, revelations on TV about the poisons and dangers of our common foods are multiplying, cutting into their profits.
Even our salt is not real salt anymore. Hydrogenated oil is in everything, causing rampant heart disease. And our kids have autism and diabetes, and attention-deficit disorders now in unprecedented numbers. Auto-immune disorders in adults are now in huge numbers.
All food is stripped of nutrition, loaded with chemicals, all in the name of low price and profit. I can buy a 500 grams packet of cookies for $1, what does that tell you about the ingredients?
There is so much more I could write about our health being poisoned by our food and drinks…
Will India forget its great Ayuveda traditions and become the next willing victim?
India is different from rest of the world and Indians are a separate race different from rest of the population around the world. If Wall Mart comes to India they will be shocked to know that their marketing strategy does not work here. He will sell Chinese make crockeries, cutleries, fast food giants inside their complex etc., yet he would be surprised to see road side dhabas making fortunes by selling chats and chaya, flower vendors selling truck loads of flowers during festival season, road corner shops selling sarees, churidhars at special discounts of festival offer etc., He will not be able to break this market. Mom and Pop shop will sell ginger paste, turmeric powder, kumkum, agarbathi, Dabur toothpowder, coconut oil, and vegetable for 1/4 kilo etc., Wall Mart cannot sell these things at such a small quantity. He will sell even branded products of FMCG at the price of MRP whereas the local kirana shop will sell at Re 1/- lesser than the MRP price. Wall Mart would sell branded chickens, and frozen fish, however our fish walla will bring fish on his bicycle and cut into pieces right in front of our home and sell in Kgs, which Wall Mart won’t be able to do. Why this Kolavery? opposition parties, nothing would happen to our retail. Don’t worry Be Happy.
couldn’t agree more with this article.. in a country like india where customers are victims of domination by the vendors, walmart may look like the only option. however how it effects the general economy is yet to be seen.
If walmart came in india nothing will happen because indian consumers are typical unlike westernors. Our people’s initial attraction to multinational outlets and they were in reverse mode. In the meantime our customary middle man business culture thrown away and a new retail business culture developed. Middleman looting our commonman’s money on account of business and they fix the price of commodities. This should be changed.
If the British could teach us English, Walmart can definitely get us addicted to junk food.
Rahul, Micky Ds and KFC ect are already in india and still cant compete with indian food.The same will happen with walmart because the indian ethos is very different as it is very competitive when it comes to buisness.Of course Walmart is strictly there for buisness but in some ways its better than the medieval trade structure where middle men who decide the food prices driving the farmers to suicide and the consumer to pay to the last rupee .So it suits them to rot nearly 50 percent of indian grown food to total waste because of no cold storage or refrigeration or any modern infrastructure.Least with the walmarts/tescos there the indians get the know how and the infrastructure badly needed so they reinvent themselves with the same methods like they do with other competition in india or abroad
I hope that mohan is right.
As Roger says – those of us that live in the west understand the base levels of behaviour that can be expected from such companies and the inhumane approach to humans and comodification of animals.
I believe there have been many suicides of farmers because of the driving down of prices by the supermarkets.
The free market economy and power of the multinationals has failed europe (and the states but they don’t admit it) this is not a healthy model for india
Well Shankar with the collapse of the Eurozone and decline in Chinese manufacturing (because they have nobody to sell to and slave labour camps as well as dals with Third World fascist despots like Mugabe and Hugo Chavez always did have their limitiations) it could well be India that will end up bailing out not only Wal-Mart but much of the western world. So as for healthy models the statist Nehru-Gandhi Marxist-Leninist model was not exaclty a shining success now was it, unless you happened to be one of the western-educated elite who had legions of servants to look after them and brigades of sycophants to fawn over them and be ‘glamour boys’. Just ask BJP’s Shushma Swaraj whose own daughter attends London School of Economics where she could get cosy with such delightful figures as Gaddafi’s son Saif al-Islam.
I absolutely think that India should allow foreign investment. The majority of the Indian people would like to see expanded options offered by foreign retails but more importantly, it is the politicians of India cheating the Indian people that has caused this resolution to fail. The passing of this resolution would have meant hundreds of billions of dollars of investment in the world’s largest democracy. Moreover, the move would have brought into place a graticule for goods transport and sale that would not only produce a huge amount of money for the Indian, American and World economies, but also put an end to the current wastage. Right now India suffers from severe hunger problems and 3/4 of India makes less than 2 dollars a day. And yet, the politicians continue to pass anti-progressive legislation. 40% of Indian crops go rotten before they meet local markets. The lack of efficiency is paid for by peoples’ lives. BUT, we must protect human life no matter the cost. When a country’s politicians disrespect Goddess Lakshmi’s good hand of fortune, they work against the progress of their people. More than that, they display a lack of respect for a force that could fight poverty and save human lives. We are voting on this right now at http://www.warofword.com/singleresolution.php?reid=506
@Govinda – this is like inviting a tiger to protect your goats from wolves!! Deal with the actual problems like corruption, and especially the food rotting before it gets to market – bringing in multinationals will bring even worse problems. The world food market is collapsing – here in the BBC is broadcasting analysis that shows that soon india will have more food purchasing power than us. The supermarket price war is bringing permenant damage to our food industry. We have the most industrialised “freshest” food chain in the world but this is going to give us shortages. Do not continue to make the mistake of aspiring to an unsustainable lifestyle and doomed economy.
But Govinda the tiger is already here in the form of a corrupt state and the plethora of vendors who wouldnt know the first thing about customer service. A price war is good. Competition is needed. It gives consumers choice. Command economies create stagnancy and stifle the human spirit. India does not have to copy the mistakes of others. With inward investment it can get smarter than before. Right now it has imported all the dogma of Marxism with all the rapacity of Victorian laissez-faire capitalism.