The French Lesson
The other day I was strolling in a Paris street leading to the building of Le Monde, the best-known newspaper of France. The street was full of make-shift small stalls, selling every thing of convenience—from food to household things to clothes. This was something akin to the weekly markets that one comes across in Delhi. The stalls were crowded. Behind one of the stalls and just across the pavement was small retail store, owned by a Pakistani gentleman, who, after a friendly chat, told me that Paris was full of such markets and small retail shops. And that is something I discovered even in the most expensive La Defense complex, Paris’ corporate area marked by sky-touching buildings, quite different from the structures and building in most parts of the French capital that are of unique French architecture. In the not too far Champs-Elysees area I noticed such a crowded make-shift bazaar; in fact, just next to the abode of the French President! And if you are in “the Tamil-land” in the northern Paris, where the posters and flags of dead LTTE chief Prabhakaran flutter freely, the streets are full of small provisional stores and make-shift shops.
It is said that Paris has more than 100,000 independent retailers, the number being higher than any other West European capital. It has such a “cafe culture” that if you walk down the high street there are cafes, bakeries and boucheries side-by-side. Strolling through bustling organic food markets such as Raspail and Batignolles makes you forget that Paris has one of the world’s most profitable grocery chains, most important being the Casino chain followed by Carrefour. In fact, two-third of the food shopping market is controlled by the big grocers and buying groups, with just 17 per cent in the hands of the small butchers and pâtisseries that charm visitors to France. And if you go by a survey on global retail industry, Carrefour is the world’s second largest supermarket chain after the American Wal-Mart. Incidentally, the word “retail” comes from the Old French word tailer.
What is more important, with each passing day, Paris is seeing more and more supermarkets, both French and foreign. In fact, as I write this column, a local television channel is showing how hundreds of Parisians have queued for more than an hour in the cold and mist to set foot in the new retailer Marks & Spencer, the British flagship, that has recently opened in Champs-Elysees after a decade’s absence from French soil, bringing the taste and feel of Britain to a city that sees itself as a world capital of food and good living. The point to be noted here is that the supermarket expansion in France has followed the relaxation of rules by the Sarkozy regime. Earlier, the French had “Loi Royer” (1974) and “Raffarian” (1996), laws that restricted the opening of large super markets or departmental chains. Any store bigger than 300 square metres required full planning consent. It also made the opening of sprawling hypermarkets selling non-food products like electricals and homewares “nigh on impossible”, as those required the approval of local panels whose members included the town mayor, architects and businessmen. But now, in towns with more than 20,000 residents, planning permission is no longer required for stores that are smaller than 1,000 square metres—the size of a small super market.
It is to be noted that when the laws were liberalised, the Sarkozy administration had to work very hard to get the support of its Centre-Right law-makers, many of whom were local mayors as well. There was resentment from small retailers. The line that the government took was that the relaxed laws had struck a balance so that it was not small stores that would be squeezed by the reforms but large supermarkets that “might not be so thrilled”. It was ensured that small suppliers were not locked out of the system by the big players. Thus we have a situation in which the small shopkeeper, known as commerçant, continues to play an important role in French life even as the big retail names grow big. It is not that the debate on this in France has been clichéd to everybody’s satisfaction, going by the researches on the topic that one comes across. But, one can say that there is enough space for the both to coexist and cater to varied tastes and interests.
It is against this background that one may look at the ongoing retail controversy in India. Is there space for the shopkeeper and big retail to coexist? Has the Manmohan Singh government, which wants 51 per cent foreign direct investments in the retail sector, attempted a balancing act? The government spokesmen say that it has—“they will not be allowed in towns with less than one million population”; “huge investments in the retail sector will see gainful employment opportunities in agro-processing, sorting, marketing, logistics management and front-end retail”; “ at least 10 million jobs will be created in the next three years in the retail sector”; “ FDI in retail will help farmers secure remunerative prices by eliminating exploitative middlemen” and that “ a minimum investment of $100 million with at least half the amount to be invested in back-end infrastructure, including cold chains, refrigeration, transportation, packing, sorting and processing”. But are these enough? Unfortunately, sitting here in Paris and looking at the Indian newspapers through the internet, I do not get a clear picture. It is on these lines that one should witness healthy debates in Parliament, but the opposition regrettably has not allowed that, despite the fact that the BJP, the country’s principal opposition party had favoured FDI in retail sector way back in 2004 in its election manifesto.
According to Vijay Anand and Vikram Nambiar, both associated with Sathguru Management Consultants, there is a tremendous scope for retail industry in India. After all, with a middle class above 300 million, organised retailing is in its infancy in the country. “It was only in the year 2000 that the economists put a figure to it: Rs. 400,000 crore (1crore = 10 million) which is expected to develop to around Rs. 800,000 crore by the year2005—an annual increase of 20 per cent. Retailing in India is unorganised with poor supply chain management perspective. According to a recent survey by some of the retail consulting bodies, an overwhelming proportion of the Rs. 400,000 crore retail market is unorganised. In fact, only a Rs 20,000-crore segment of the market is organised. As much as 96 per cent of the 5 million-plus outlets are smaller than 500 square feet area. This means that India per capita retailing space is about 2 square feet (compared to 16 square feet in the United States). India’s per capita retailing space is thus the lowest in the world”, they wrote, quoting KSA Technopak (I) Pvt Ltd, the India operation of the US-based Kurt Salmon Associates.
Though their study is five-year old, in essence, the scenario remains the same. Therefore, all these talks of retails creating unemployment are sheer nonsense. Come what may, the roadside hawkers and the mobile (pushcart variety) retailers are going to be there for as long as one can see. In fact, their number will increase, not decrease. For instance, despite my wife going periodically to the “Big Bazaar’ and “Reliance outlets”, “kirana store” across the street happens to be our principal grocery source. So also the local vegetable market. And this will continue as long as they provide the home-delivery facility. One may also recall here how it was feared when McDonalds and KFC came to Delhi decades back that the local eateries will close their shops. But the reverse has happened. We find more Nirula outlets all over, not to speak those of the Nathu’s and Haldiram. Same was the phobia that the coming of computers will take away the jobs of the “clerks” and “secretaries”!
I find it all the more bizarre when critics say that they are fine with Indian retailers (owned by Indians), not with foreigners even though the latter provide cheaper and better products. Getting the value of the money is every consumer’s right; our opposition leaders cannot deny us that right.
By Prakash Nanda