Indian sugar mills association

FDI in retail: Organised retai

Date:	01 Dec 2011

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News ID:	742

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BANGALORE/MUMBAI: Ram Agarwal, a kirana store owner at Kolkata`s Salt Lake area, every fortnight walks up to competition in the locality-in his case Big Bazaar and Spencer`s Retail outlets-to spy on their product prices. Without surprise, lower prices greet him at every visit.

"The kind of deals these retailers provide in some products is impossible to match," says Agarwal, who has been running his shop, Radhe Shyam, for 24 years now. But he does match the retail goliaths when it comes to small pack sizes, which makes up the core of his sales basket.

Agarwal knows what opposition parties seem to ignore while opposing the government decision to allow 51% foreign investment in food and grocery retail-that modern retail helps consumers save their precious pennies amidst relentless rise in prices all around. ET visited popular kirana stores across Kolkata, Gurgaon, Delhi, Mumbai, Bangalore, Hyderabad and Chennai to compare their prices of day-to-day items with big retail chains in their cities. Modern retail won hands down.

In branded items such as detergents, wheat flour and edible oil, modern trade prices were 4-20% lower than general trade, which primarily sold them on MRP. And in unbranded staples such as sugar and onions, larger stores were cheaper anywhere between 10-35% in different cities. Take the case of onion.

In Bangalore, Aishwarya department store sells it for Rs 20 per kg, while Aditya Birla Retail`s More on the same road charges Rs 16.90. In Chennai, Star Bazaar, a hypermarket chain run by Tata`s Trent in a franchise agreement with UK`s Tesco, sells onion at Rs 18.50/kg, but at Jyothi kirana at T Nagar it costs Rs 24. The reason for this, say big retailers, is that they are able to cut through various levels of middlemen while sourcing. Also, these chains can bargain for lower prices with manufacturers because of their large purchase orders and pass on the savings to the consumer.

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