Retailing is the last link in the supply chain connecting the bulk producers of various commodities to the consumers-thus working as the final step in the distribution of goods-and with the introduction of retail banking-also services. Retail covers the entire range of goods such as apparels, footwear, cameras, cell-phones, CDs, washing machines, and from financial service to provisions of entertainment, tourism and leisure.
A retailer is typically someone who does not add value to the good or service sold nor does he effect any change in the product except breaking the bulk. He is the final outlet making the goods and services available to the consumers whenever required, thus helping easy access or availability of various types of goods and services at the desired location in desired time.
In the developed countries of Europe and America, the retail industry has developed into a full-fledged organised industry where over 75 per cent of the total trade is done by the organised sector. India’s march towards retail as an organised industry started with the opening up of the economy with the adoption of the policy of economic liberalisation in the wake of globalisation during the early 1990s. This paved the way for more active participation of the vibrant private sector in economic activities including the making of huge capital in retail business.
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The congenial environment created by globalisation and economic liberalisation gave a tremendous boost to trade and commerce, encouraged foreign companies to outsource as well as invest in India. The flow of Foreign Direct Investment (FDI) in India started showing an upward trend and is still continuing to do so. The big retail chains like Wal-Mart, Sears, K-mark and McDonalds, etc. are now replacing the individual small stores across the country.
Several Indian biggies like Reliance and Birla Group have also ventured into the retail business in a big way. Certain other private companies have opened shopping malls in the big cities across the country as retail outlets of various types of goods in the same multiplex which can be called a supermarket.
The mall culture has come to India in a big way and has come to stay. The malls are huge shopping complexes built at convenient places-normally in the city centre. They are multi- storeyed, modern, beautiful buildings containing a large number of shops or segregated sale outlets for a range of goods ranging from ready-made garments to jewellery-covering electronic items, and every conceivable consumer article.
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These malls are fully air-conditioned and customers find shopping an enjoyable experience. The articles are neatly displayed at appropriate places where customers can have a close look and check the price for each item on the tag. There is no room for bargaining nor is there such tradition in the malls. Discounts may be on offer on certain items-the information about which is displayed at many places and is otherwise advertised through media and close circuit TVs. Each item is billed properly with taxes duly charged and remitted to the government.
Within the shopping mall are restaurants and eating plazas where one can go for lunch, dinner or snacks to make shopping a complete outing with one’s family. Children are not bored if they are hopeful of getting their favourite dish like pizza or a pastry with cold drinks. There are also arrangements for entertainment/games in certain malls- especially for children. Each shopping mall has an adequate parking place so that the roads are not blocked with large number of cars being parked near the mall.
The development of mall culture in India has attracted many foreign companies and NRIs to invest in India. The reality stocks in the Indian stock market have experienced an unprecedented boom. These foreign companies are investing in property- commercial as well as residential and have built up sizeable tangible assets.
Even the big private companies like Reliance Industries have bought a large number of properties in major Indian cities to set up malls and supermarkets. This has led to a sharp rise in the prices of real estate in India. Not only the commercial plots but also the residential properties have seen an escalation of over 100 per cent in their prices.
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While the government has earned revenue of millions of rupees in the shape of taxes and duties on the transfer of properties, the inflation has been on the rise, leading to government to take monetary measures like increase in CRR as well as the repo rates. Another negative effect of this price rise has been that properties-even the LIG and MIG flats have gone beyond the reach of middle-class group.
The arrivals of big players in the retail business and the opening up of supermarkets and malls have adversely impacted small individual traders and shopkeepers. More and more people have started going to malls for shopping because of clean atmosphere and convenient shopping.
They don’t have to tire themselves out by searching the whole bazaar to buy different articles as the whole range is available in one complex. The small vendors, hawkers, small shopkeepers and weekly market/ pavement sellers don’t have the wherewithal to provide that much variety or offer handsome discounts as their supplies are limited and their profit margins are small. There have been protests in some cities in front of the supermarkets and stores by the associations of traders.
They say that these malls, multiplexes and supermarkets are encroaching on their business and are snatching their livelihoods. As more and more people have started preferring to go to supermarkets, the small traders and shopkeepers are experiencing a slack business and are finding it hard to even recover the costs. Although legally, they cannot ask the supermarket owners to close their business, yet the adverse impact of mall culture on these small retailers cannot be ignored.
Another charge that is levied against these malls is that some of them owned by foreign multinational companies (MNCs) give a tough competition to the local Indian company-which harms local trade. The MNCs like Wal-Mart also prefer to sell foreign goods instead of indigenous products which again is detrimental to local industries. However, some people believe that these companies bring new ideas and high quality products and unprove the standards of local companies.
The reaction of the people at large towards the development of mall culture in India has been quite favourable. Most of them feel that the quality of goods available at these stores is much better than those available at ordinary stores. The prices are also reasonable and in some cases, lower than at other places.
This is true because big business houses are able to reduce the cost price because of bulk purchases from their suppliers at a bargained price and are, therefore, able to sell at a slightly lower price. They may have a direct arrangement of supply from the manufacturers who may charge a discount price because of assured regular orders. Big retailers do business on the praxis that large sales even at a small profit margin yield a high amount of profit and attract customers regularly.
The small retailers and shopkeepers cannot offer such discounts. The other advantage that consumers find in shopping at malls is that they don’t need to carry cash which is risky anyway. They can shop with their credit cards. The banks allow them credit facilities up to the sanctioned limit. The accounts are settled periodically when the customer gets his salary, etc. Thus, people can shop without actually having any money.
The banks add to their profit by charging interest and other charges on the credit given under the card. The government gets service tax from the bank, sales tax and now Value Added Tax from the mall-owner. These facilities are not available with most of small traders and retail shopkeepers. Nor are they so much revenue spinners for the government.
These malls and supermarkets have given employment to lakhs of persons across the country. Working in double shifts and open up to well after sunset, these shopping malls have to employ thousands of people for different types of jobs-from security guards to sales boys/girls to cashiers and supervisors.
The suppliers of various types of goods and equipments are like ancillary units that flourish because of these supermarkets. These suppliers promote cottage industry when they, in turn order the manufacturing of various types of goods like packaging material, display banners, tags, uniform makers. Many handicrafts items are actually on sale at some malls.
As things stand today, the advantages of malls far outweigh the disadvantages.