The Wal-Martisation of Retail

walmart_photo.jpgWal-Mart may not be in India yet, but the retail revolution has already begun. Even as the debate on whether foreign companies should be allowed unrestricted access to the retail sector rages on, Indian conglomerates have already jumped in.

Those who have set up shop in this sector include the RPG Group, Pantaloon Retail, the Wadia’s, the Rahejas, the Aditya Birla Group and the Mukesh Ambani headed Reliance Group. Reliance has set up its own operations while AV Birla group has taken over existing retailers.

These companies have abridged the supply chain thereby bringing the producer closer to the consumer. This has made a typical FMCG product reach its buyers much faster than before. It has eliminated the consolidator, the trader and the commission agent. As a result there has been a drastic difference in the prices of most agricultural products sold at major retail outlets. Large retailers are able to give better services to there customers. The consumer is assured of good quality and fair prices. They can make payments through credit cards, get free home delivery of goods, compare prices of products and make wiser choices.

According to the A.T Kearney’s 2007 Global Retail Development Index, the organized retail industry in India is growing at the rate of about 40% a year. It is predicted that organized retailers who command about 2% of the total turnover of $350 billion now, will increase in share to over 5% by 2010, when the retail turnover touches $427 billion.

With so much money already in this sector and more being pumped in, one must wait and watch to see who becomes the ‘Wal-Mart of India’. But one thing is for sure; the consumer will certainly be the king.

Astik Sinha