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Effects of Retail Stores in India: Consequences and Benefits

BY: Swati | Category: Shopping | Post Date: 2008-08-12

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It is estimated that the retail market of India is more than $300 billion and is increasing steadily every year, most of which is currently dominated by smaller privately owner shops and vendors. On one hand big retail stores (like Reliance-Retail and Bharti Wal-Mart) give a huge advantage to a common buyer who will be able to get his stuff at a much cheaper price and the convenience of buying everything at one place without hopping from one smaller shop to another.

On the other hand, India has been a country where the lively hood of crores of people (and their family) is dependent on these smaller shops ( or mom-and-pop shops), kirana stores, roadside vendors and outdoor markets. Believe it or not, a very large portion of these shopkeepers and vendors will soon face huge unemployment in the next decade because of these big retail stores chains due to increased competition. There is no clear demarcation whether these retail outlets are good or bad for the country as they come with many advantages and disadvantages, some of which are listed below.


1. Low Cost of Goods:
A local shopkeeper has to keep better profit margins per item because the number of items he sells is far lower than the big box retail stores. The concept of Big Box retail stores is all about selling products in a large volume and their smaller margins multiplied by the number of goods they sell eventually results in humongous profits. A common person like you and me benefits from cheaper goods.

2. Quality and Cleanliness:
You will usually not find any sub-standard items in these retail stores. These stores only offer branded items for sale, placed nicely in designated sections and the cleanliness inside them will be much better than what you usually find in smaller shops or your local market.

3. Buy everything at one place:
No longer you have to sweat around and make multiple stops as everything can be found in one big store. It is common to have these stores centrally air conditioned ( or heated as needed) for a great shopping experience.

4. Elimination of Fake (Duplicate) and sub-standard goods:
We live in India and it is common to find fake replicas of almost everything - jeans, purses, electronics ... you name it. You will not find all this in big retail stores as they have to maintain they quality, reputation and brand name.

5. Customer Satisfaction:
Among all the conveniences, customer satisfaction is usually much better in bigger retail stores.

6. No pressure to buy, bargaining or haggling:
Take your cart, go around in the store and buy only what you want without any sales pressure.

7. Steady pay, job benefits & paid time off:
People who work in bigger stores get advantage of certain number of paid holidays in a year, on the other hand an owner of a privately owned shop will earn only when his shop is open for sales. Job benefits may also include a medical insurance and a tension free fixed salary.

8. More tax collection:
The concept of black money is fairly common in India. People do not disclose all their profits and try to dodge the tax as much as possible. Corporations which own these big retail stores cannot take the risk of fraudulent tax activities and their reporting is fairly honest, even though they may find legal ways to reduce the tax.

9. Convenient Car Parking:
Unlike retail stores, most smaller shops do not have a budget to provide a dedicated car parking to its customers.


1. Job losses:
This is undoubtedly the biggest disadvantage all communities have to face when a big retail store makes it's way into their city. Since these stores sell electronics, groceries, stationary, footwear, clothing, consumer durables and other general merchandise, it is a huge competition to almost every shopkeeper in the city. Even though these stores will employ some workforce themself, the number of job losses are much more than those created. Job losses may also mean higher crime in the society.

2. Foreign Influence:
Foreign corporations start to control our domestic market, we live in a globalized world these days and many people do not like it.

3. Enjoyment and charm of community shopping is lost:
Big stores are nice when you have to shop quickly, but to have a community and old-styled shopping enjoyment, nothing beats these smaller and privately owned shops. You get more variety and not just those brands which have been shortlisted by the big retail shops. Shopping in big retail shops can be boring and monotonous.

4. Domestic manufacturers suffer too:
Local shopkeepers buy lot of items from smaller domestic manufacturers, they many not always be able to compete with bigger and international manufacturers. Foreign made goods like "Made in China" eventually will further kill the domestic manufacturing through these bigger chained retail stores.

5. Independence lost:
The pride of owning a business is lost. You will have to work along with the terms and conditions of your employer, otherwise you may get fired (from job). You cannot take risks or financial rewards based on your personal judgment only.

6. Salaries do not often keep up with rising inflation:
To begin with, the salaries of these stores may look attractive, but unlike other sectors, these jobs do not experience a large increase in salary every year as these stores may find cheaper replacement workers if needed.

7. Knowledge about a specialized product:
Most of the staff who work in these retail stores are people who are given little trainning, and most of them have not been employed in that department long enough, they are able to answer general questions only. A shopkeeper who has been selling a product for a long time may have a more practical experience about the product and may be even able to repair it if required.

1. Unionization:
I will not be surprised if these retail store workers see worker unions going forward. Unions have their own advantages and disadvantages so I stand neutral for this.

2. Defective goods returnable:
Most shopkeepers will fix an item if it breaks or malfunctions, retail outlets may not be able to repair it but some may do even better by replacing it all together.

Article Source: http://www.saching.com

About Author / Additional Info: These are my personal thoughts and not based on any concrete research.

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