India opens gate to Retail Revolution – FDI in multi brand retail



FDI in multi-brand retail In India – “Welcome Gear up, Grow and Profit ”
The government has given a nod to allow 51% FDI in multi-brand retailing which means foreign players are now welcome to open and own retail shops in India. This has come with a condition that imposes 30% Local Content Requirement (LCR), which means these companies should source a minimum of 30% of their goods from Indian micro and small industries there by providing scales to encourage domestic production and consumption.

The advantages this new reform can confer are:

  • This investment will result in job opportunities in areas of marketing, agro-processing, packaging, transportation, etc giving rise to 10 million new jobs.It will ease supply side pressures and ease inflationary concerns.
  • The existing players including unorganized retailers will benefit by way of greater market access and higher profit margins.FDI infuses technological advancement, enhance production possibilities and induce capital flows, which help in maintaining general macroeconomic stability.
  • Farmers will get better price of the produce and enhance their living standards. The end consumers who are the residual beneficiary will derive value for their money and enjoy shopping delight.
  • The middlemen will get eliminated resulting in cheaper sourcing of products resulting in decreased price paid by the customer. However, FDI offers several alternate business opportunities for them in Logistics, co-ordinated farming, downstream processes.
  • It will motivate the Kirana Shops, Neighborhood stores, Mom & Pop stores and unorganised retailers to organize and participate in the market expansion. Every one have their share when there is growth.
  • It will help India get back to her growth path and regain confidence amongst international community and institutions. This will benefit the current and future generations.

It is not 100% true that the kiranas or other small & medium local players will get totally displaced with the emergence of these so called “BIG” players. The prime reason being kiranas are present at the door step of every customer and it is practically not possible for the foreign players to set up stores at every customer’s door step. Secondly, the business model of Kiranas can’t be matched with that of BIG players. Many of the consumers purchase products from the kiranas on credit and mind you this “Credit is out of trust and not out of credit cards”. Foreign supermarkets can’t operate with this model of business.

It should not be forgotten that the BIG players are themselves appreciative of the fact that the unorganized retailers or the  Kirana shops have unique competitiveness,

which cannot be matched by their cost and labor intensive business model. Hence there is a “road to walk without dead end”.

But, the fact still remains intact that local small & medium scale retailers must embrace latest technology in terms of implementing good software to implement best practices, automate, grow and get insights on strategic planning, to enhance customer loyalty and increase customer retention.

Big Retailers are also following a wait and watch attitude.

How the Indian kirana store can stay on top

Window for new opportunities to Kirana stores. Partners in common pursuit approach by a leading Retail company, offering Kirana shops to become their Franchaise partners.

GoFrugal lends its helping hand to assist you in every way to put you upfront to compete, survive, succeed, excel and profit.