In India, a Retail Revolution Takes Hold
Wednesday, May 23, 2007
GURGAON, India -- Pushing his cart through the gleaming, air-conditioned aisles of one of India's first supermarkets, Vikrant Mehta was relieved to buy his family's potatoes, mango chutney and hair oil "all under one roof."
While his wife cooed over the shiny tomatoes, Mehta said he didn't miss India's infamous open-air bazaars, with their buzzing flies, haggling peddlers and surging crowds. Even the friendships -- with the fruit seller who provided health advice, the bookseller who kept reading lists and the carpet man who offered loaners -- were, "frankly, a huge amount of pressure," he said.
"I'm not here to make friends. I'm just trying to shop," said Mehta, an executive with Air India. "Finally in India the customer is king."
Supermarkets and other large chain stores are on the rise in India, just one way in which this country's growing affluence is slowly changing its people's habits. Rising with the stores are megamalls, brightly lit and futuristic, that tower over the hundreds of fruit and vegetable vendors in New Delhi's booming suburbs of Noida and Gurgaon.
India has a growing middle class estimated at 300 million people. With a total population of 1.1 billion and economic growth rates of 8 percent a year, the country is emerging as one of the largest consumer markets in the world.
"There is a perceptible change in Indian retail that comes with our huge consumption boom," said Saurav Sanyal, a Gurgaon-based consultant with Carrefour, the French version of Wal-Mart. "As India changes in the coming years, people will increasingly be cash-rich, time-poor and may not find bargaining convenient. But this change will take years. I expect the modern and traditional formats will coexist for years to come. Yet the shakeout will come."
An estimated 80 percent of India's retail outlets are still neighborhood shops, consulting firms say. Still, there's a growing sense that mom-and-pop shopkeepers will eventually be nudged out by chains, which can buy cheaply in bulk. India's retail sector is expanding by more than $27 billion a year, according to the World Bank, and holds vast appeal for large corporations.
It's hard to imagine an India without mazes of noisy, crowded street shops filled with garlands of marigolds, bags of masala chips, statues of Hindu gods and red wedding bangles. In lively markets in cities across India, the humid air is thick with jasmine incense mixed with sweat. Punjabi pop music thumps as samosas fry, carpets are rolled out and glittery saris are unfurled, all while donkey carts and cows wander by.
Large chains may endanger the small-time vendors who work in such markets, but they also could imperil a deep-seated Indian ritual: bargaining. In a sign of what may come, Kolkata's famed neighborhood of booksellers, home to the largest market for secondhand books in Asia, is being moved by the city into a mall.
Many merchants also fear the chain stores may widen the gap between India's up-and-coming and those left behind. While the country is going through an economic renaissance, there is still grinding poverty, with 300 million people -- as many as are in the middle class -- living in heaving slums, without running water or electricity, often in the shadow of malls and five-star sushi restaurants.
Earlier this month, independent fruit and vegetable sellers rioted at Reliance Fresh, an Indian-owned chain of about 80 air-conditioned stores that carry groceries and convenience items. The company tightened security and announced it would open 1,500 more stores by 2009.
News that Wal-Mart and an Indian venture partner, Bharti Enterprises, are planning to spend $2.5 billion by 2015 to set up stores across India also sparked protests earlier this year, with demonstrators shouting, "Save small retailers!"