Business Today

Retail rage

It’s 10 in the morning, and at the historic Azad Maidan, where The Mahatma used to address swelling crowds during the Civil Disobedience movement, another movement is slowly gathering steam.

By T. V. Mahalingam | Print Edition: Nov 4, 2007

It’s 10 in the morning, and at the historic Azad Maidan, where The Mahatma used to address swelling crowds during the Civil Disobedience movement, another movement is slowly gathering steam. It’s Mumbai’s first major protest rally against corporatisation of the retail sector. ‘Mike testing’ is on as a sprinkling of protestors waits patiently under the sweltering sun.

There are more television reporters and cops (two truckloads of the latter) than protestors waiting for ‘the action’ to begin. In sync with the historic nature of the venue, there are banners bearing the images of the founding fathers of the country—Gandhi, Jawaharlal Nehru, Bal Gangadhar Tilak, Subhash Chandra Bose and even Bhagat Singh.

The organisers of the event had ‘promised’ 50,000 protestors but less than 50 are around. Half an hour later, 50 more join exerting their vocal cords. Just as the camera crews were getting restive, the ‘action’ begins.

Brewing anger

Almost out of the blue, they came—petty shopkeepers, hawkers, pushcart vegetable vendors, chemists, onion merchants and manual labourers. They came packed in buses and trucks, in motorcycle cavalcades from all over Mumbai and nearby districts like Thane, Pune, Raigad. Passengers in Mumbai local trains complained of surging crowds and the occasional unruly behaviour. At the venue, it was ‘byte hunting’ time.

A local leader spews hyperbole and spittle, in equal measures. “East India Company came to India as a trading company and then they took over the country. Today, we are an independent country and are inviting MNCs like Wal-Mart to take over the country,” he proclaims.

But that was just the beginning. Nearly two dozen people mount the makeshift dais, including the anti-retail movement “champion” from Uttar Pradesh and Samajwadi Party MP, Banwari Lal Kanchal. “Why do these companies that own refineries and sell cloth, petrol and cellphones want to sell onions and potatoes?” thunders Shyam Bihari Mishra, a former BJP MP in a not-soveiled reference to Reliance Industries and Bharti Airtel.

As the decibel levels of the speakers soar, impassioned zindabads fill the air. “People ask me why we use violent methods,” asks Kanchal who trashed Reliance Fresh stores in Uttar Pradesh. “Killing somebody is violence. Breaking the door of a shopping mall is not violence. Until you break their malls and burn their goods, nobody is going to listen to you,” rationalises Kanchal.

Reliance rage

By the time the speeches came to end, more than 5,000 people had participated in the protest—a far cry from the 50,000 mark but still ominous enough. The protest has been organised by Vyapar Rozgar Suraksha Kruti Samiti, in association with a dozen other associations such as Federation of Association of Maharashtra (FAM) and NGOs like India FDI watch.

These bodies are protesting a list of things—from the entry of corporates in retail to Foreign Direct Investment (FDI) in retail to implementing a national policy on hawkers. Another demand of the protestors is scrapping the Model APMC Act. Like the President of Federation FAM, Mohan Gurnani, says: “We want the amendments to the Agricultural Produce Marketing Committee Act that allows corporates to buy products from farmers and sell them directly to the consumers.”

Big is Bad

Having said that, the protestors’ ire seems to largely focus around the two corporates—Reliance’s Fresh outlets and Bharti’s tie-up with the international poster boy of Big Bad Retail Business, Wal-Mart. Reliance has had its stores vandalised in Orissa, Uttar Pradesh and Jharkhand. In UP, the company was forced to down shutters on all its 23 Reliance Fresh outlets and let go of 235 or so employees.

Protests have also been held against Reliance Fresh in West Bengal, Madhya Pradesh, Jharkhand and Kerala. In all, Reliance has opened 300 stores in 30 cities and 12 states, since its launch in November 2006. The Bharti-Wal-Mart alliance is yet to start operations and the first store may be launched only in the latter half of 2008.

Other retailers like the Future Group and Subhiksha that are rapidly expanding across the country have so far managed to escape the wrath of the protestors. “We are not into the fresh vegetables business in a big way. Also, as a policy we do not sell anything below the cost price,” says Future Group CEO, Kishore Biyani. Chennai-headquartered Subhiksha Trading Services has faced protests in the past from chemists who claim that the retailer has been selling drugs at prices lower than the market rates.

Subhiksha Managing Director R. Subramanian, however, is confident about his expansion plans, including UP where the retailer has 60 outlets. “At the end of the day, organised retail is a great thing for consumers. Of course, we have to take care of all the stakeholders involved,” says Subramanian.

It’s a point that RIL Chairman Mukesh Ambani was at pains to point out at the company’s recent AGM. “Our organised retail initiative is configured to increase income in the hands of the farmers and serve consumers by improving supply chain and distribution efficiency. We want to achieve these twin goals by reducing wastage,” he said.

Mukesh Ambani
Mukesh Ambani: CEO Reliance Industries

Considering that 30 to 35 per cent of 60 million tonnes of fruits and vegetables in the country—in value terms about Rs 58,000 crore and more than the fresh fruit produce of the UK—are wasted due to a lack of storage and other facilities, organised retail is not the evil business it is being made out to be. “At the end of the day, India’s retail market is so huge that there is place for everybody, including smaller players,” says Subhiksha’s Subramanian.

The Indian retail sector is estimated to be around $328 billion, with less than 4 per cent being accounted for by organised retail. Subramanian believes that the present conflict is one largely caused by perception. “When a retailer says that they are going to make investments to the tune of several thousand crores of rupees, it raises everybody’s eyebrows. That raises the fear levels of some of the smaller players,” adds Subramanian.

It’s a problem that Ambani seems to be conscious of. “We are sensitive to the interest of small shopkeepers. Our retail initiative will in no way jeopardize their interests and that of small vendors who service customers,” said Ambani, who also cited the company’s purchases of banana crop as an example of how Reliance retail venture could benefit farmers. “Reliance is bringing to farmers, to begin with, in Gujarat, Maharashtra and Andhra Pradesh, high quality tissue cultured banana plants that yield 35 to 40 kg per bunch of fruits as against 20 with conventional cultivation. Reliance buys these bananas from farmers at prices that are 10 to 15 per cent higher than what they get through conventional channels,” he added.

But the problem for players like Reliance might lie beyond just flawed communication or perceptions. It’s that ugly word called politics. “The problem is that unlike most of its other businesses, the retail business opens up a thousand pressure points for Reliance as it involves a lot of on-the-ground activity. And people (read politicians) sense an opportunity to pressurize the company and make money,” says a senior executive of a retailing group, requesting anonymity.

Observers have been surprised by the lack of serious support for Reliance from other retailers. “Earlier, the industry lacked consensus and bickered on key issues like FDI. Reliance took a tough stance against FDI in retail claiming that it would harm the domestic retail, especially small traders. Now they cannot just turn around and ask for support from other players or the retail industry body. As for the small trader, he does not care who he is killed by—the MNC or a large Indian corporate,” says the head of another retailing major. However, industry association CII has condemned closure of Reliance Fresh stores in UP and warned that such orders will adversely affect the poor.

For now, the protestors have set a deadline—January 26, 2008. If by then, the government does not heed to their demands, they plan to take the stir nationwide and do not rule out trashing malls and retail outlets. With mid-term polls still likely, this is one emotive issue that will not die silently. Unfortunately, in the process, India—farmers, consumers and even small shopkeepers included—will lose time and an opportunity to benefit.

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