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Foreign Super Market Vs Indian Retail Market Marketing Essay

Paper Type: Free Essay Subject: Marketing
Wordcount: 5397 words Published: 1st Jan 2015

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In this world of development, globalization and competition, India is also not lagging behind in adopting a modern approach in every field. This is the most challenging and exciting time to live in wherein a huge, multicultural India is transforming from a socialist economy to a consumption led economy Let us take the example of the Indian marketing industry. What set’s India apart is the diversity and the uniqueness of the Indian market.

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We are a nation of shopkeepers and there are a billion people to sell. Selling garments, grocery and household stuff cannot be anything but simple. Retailing is a simple act of buying and selling. In the past Indian market was dominated by the small traders who were involved in selling imported goods and imported retail markets but in this race for competition the Indian market is now being replaced by super marts [2] which is a very western and modern concept and is not acceptable to the Indian society according to me.

Due to the introduction of super marts, the small retailers and traders are steadily on the verge of declination and a time will come in the future when they will be completely rooted out from the Indian market. Over the past 150 years, grocery retailing has undergone numerous major structural adjustments and technological changes. In the mid-1800s, chain grocery stores typically were 500-600 square feet and contained a limited assortment of goods. By 1941, thousands of chain grocery stores were replaced by supermarkets with very large floor designs (more than 5,000 square feet) and new advances in store shelving. Supermarkets consolidated power through mergers and strong barriers to entry. Antitrust cases brought against the industry attempted to redirect it to more competitive practices. Driven in part by economic recessions and energy crises of the 1970s, the warehouse supermarket format emerged, deemphasizing quality design and atmosphere. In the late 1970s, wholesale clubs and hypermarkets were introduced. Targeting customer clientele and combining wholesale and retail functions were key cost controls.

The latest major structural adjustment has been the advance of the supercenter. In 1988, the rise of the supercenter format began when Wal-Mart opened its first supercenter, which combines food retailing with general merchandising and pharmacy under one roof. Up to 40% of floor space is devoted to grocery items. Shortly thereafter Kmart and then Target opened supercenters which meant that the nation’s three largest general merchandisers had entered into grocery retailing. By the end of 2005, the number of non-traditional food retailing supercenters increased to over 1,600 stores. Meanwhile, as supercenters took market share from traditional supermarket retailers, the supermarket industry responded with large mergers and acquisitions, creating fewer but larger firms.

Small traders and retailers who have been ruling the Indian market for the past many years and are well aware of the requirement of the Indian consumers. Most Indian customers are accustomed to shopping at the small neighborhood stores or purchasing from the street hawkers, only a small fraction of people are comfortable with the organized stores.

These traders and retailers are within the reach of every Indian consumer irrespective of the economic status. They believed in hard work, sincerity and ethics but the modern supermarkets are very commercial and money minded. Their only concern is profit making.

Business is entirely dependent on observing people, understanding their emotions and catering to their needs. This has been the utmost priority of the small retailers.

The super marts are only being introduced in the bigger towns and cities as they are only affordable by the upper class Indians, so these marts are not able to fulfill the requirement of all the Indian consumers. Hence has drawn a line between the consumers on the basis of their economic status. The same goods are sold at a higher rate at the malls than at a retailer shop. This is giving rise to a sense of disparity among consumers.

India comprises of three types of classes according to the type of consumer-

1) THE CONSUMING CLASS-This class have substantial income and constitute the upper middle and lower middle class, and they are mostly the target group of the supermarkets. They have enough disposable income to spare not just for their daily needs but also for comforts and a lavish lifestyle and hence are targeted by the bigger stores.

2)THE SERVING CLASS- Includes people like drivers, household helpers, peons, washer men etc. their number is more than the consuming class but they have very little disposable income to spend on buying aspirational products and services.

3) THE STRUGGLING CLASS- This group of people can’t even aspire for a better living. Unfortunately this segment will continue to be on the peripheries of the consumption cycle in India. Their needs cannot be addressed by the existing business models.

It has also been noticed that the master and the serving class never shop at the same store. While the lower middle class visits hypermarkets and discount chains, the upper middle class visits department stores and specialty chains and supermarkets.

Even though the serving class buys some of the same products as the consumer class but they can never visit the modern retail chains. For them the clean and shiny environment of the modern retail stores creates a feeling that such stores are too expensive and exclusive and are therefore not meant for them.

The super marts and malls are not just creating a disparity among the consumers but also among the shopkeepers.

There cannot be a healthy competition between the two and the market will always be dominated by the stronger and the bigger shops.

For the past many years the Indian market has been well known for its agricultural products, poultry products, spices etc. but now the big retailers, malls and marts are flooding the Indian market with foreign goods and the Indian goods are losing their value day by day, as a result of which the quality of the Indian products is also declining.

The real India, as we still known for its regional agricultural products like Punjab is known for wheat, Chhattisgarh is known for rice, Maharashtra is known for sugarcane, Jammu and Kashmir is known for apple etc. Gujarat is known for Cotton and milk products. Anand is known as the Milk Capital of India. It became famous for Amul dairy and its milk revolution. This city hosts the National Dairy Development Board India and Anand Agricultural University constituted by its business villages and hence it is the right of farmers to sell their agricultural products in the Indian market not only in the small towns but also in the big cities.

But the malls are even trying to replace their right. They are not even selling the fresh products but still the people prefer to go to the malls for each And every small requirement as a result of which the small traders are becoming furthermore desperate and are finally using wrong methods and this unhealthy competition is also giving rise to food adulteration.

In the past times traders were more concerned about the quality but in the present scenario the big retailers are more concerned about the quantity rather than the quality of the product. Previously there was not much competition but presently due to the competition among the big marts in order to achieve a dominant position in the market they introduce various types of offers to attract the customers but makes the quality of the product suffer. They offer discounts on low and defective quality products.

The super marts try to attract the customers by advertising that everything is available under single roof but actually there is a restriction of choice at such marts. If any item is not available at one shop then they are not left with any option. As we always have the option of other retailer shop but such options are lacking in marts.

There are a few emotions that can determine the basic behavior of a customer while shopping. They are-




GREED- It mostly happens in the big supermarkets that the customer purchases more than he or she needs purely out of greed which is generated because of the cheap and attractive offers at the supermarkets. In a retail shop the customer will just go and buy what he needs as there is not much scope of creation of greed in a retail shop.

FEAR- the customer will purchase more than what required due to a fear that the current price offers may not be available for long so the customer purchases the product right away. Such fear never exits while shopping from the small retail shops.

ENVY- When a customer sees the other person buying product envy sets in and they also want to buy the same product so that they also make the best out of offer.

So the big supermarkets are able to effectively create all the above emotions and divert the customers from the retail shops to the supermarkets. The small traders and retailers do not have much scope to advertise and promote and so they lag behind in attracting the customers towards them. In previous times the market persisted without much need of advertising but now a days promotion and advertising is required in each and every field.

For the sake of profit the malls even try to attract small children by keeping various types of video games which is actually not very good and healthy option for children. In previous times when there were no malls parents preferred to take children to parks, museums and other educational places but with the introduction of malls such options are preferred by children.

Again for the sake of profit these malls offer a variety of fast food option which is also very unhealthy habit.

In the past people used to buy grains at one shop and then take it to another that had grinding machine to get it ground into wheat in their presence so that they could touch, smell and feel the wheat grain before buying it but now the supermarkets only provide with packaged grains and slowly the concept of grinding machine is coming to end but some people are not comfortable in buying packaged products

The shopkeeper consumer relationship is also totally professional in this new set up. The interaction and the trust present between the small shopkeepers and consumers is totally lacking in the super marts. Even the exchange of items in case of any sort of consumer dissatisfaction is also very difficult because of lack of interaction and understanding between the consumer and big marts.

We are a nation of shopkeepers and the traditional (kirana) General stores/shops provide a lot of advantages to the customers that the modern retail cannot match. They have a personal relationship with every regular customer. They offer home delivery and customized services. They know what a regular customer wants even before she enters the shop.

In the previous set up of the retailers there was direct interaction of the shopkeeper with his client and customers. This ensured direct flow of information, insights and knowledge. Modern day business is structured in such a way that most of the critical details of the ground level are lost in the multiple layers of the organization. The modern retailers make grand presentations and have long meetings just to share data .Often the only outcome of these meetings is deciding when to meet next. By the time the data reaches the top, it’s either been misinterpreted or has been irrelevant.

India, which holds the second largest population in the world considers its manpower as the biggest strength but the malls which are replacing the Indian markets are giving their shops to mostly the western brands as a result the small unbranded shopkeepers are being outshined and thus the introduction of mall culture in Indian markets is in fact destroying the Indian market and can be counted very soon as one of the causes of unemployment in India.

Their only motive is spread of foreign brands and goods in Indian market which will ultimately lead to domination of western industry and declination of Indian industry from India. -A legal body in the form of Competition Commission of India will keep a constant check on the foreign retailers for any anti- competitive practices and predatory pricing.

-Examples of other countries which approved of Foreign Direct Investment in retail are being given.

Take the case of Indonesia where 90% of fresh food and 705 of all other food items is under the control of the traditional retailers even after the emergence of supermarkets [3] .

China has approved for 100% Foreign Direct Investment in their retail sector and there has been good growth and development. They are not facing any adverse effects on their domestic retailing market [4] .

There is enough space for both large retailers and neighborhood grocers to co exit as both have their strengths.

If we do a comparative study between the two it can be illustrated with the following points-

The neighborhood grocery shops have a upper hand in the following points-

1) PROXIMITY- there is no doubt that the biggest advantage of these shops is their easy accessibility. Their location is such that they are within the reach of the people and are able to fulfill the daily and emergency requirements of the people which obviously cannot be done by the supermarkets given their location. People will not prefer to travel long distances to buy daily needs.

2) NO PARKING HASTLE-a major reason that is responsible for the fact that people prefer the neighborhood grocery shop for their daily item shopping is that they are saved from the parking problem which they have to face in the big marts. The parking of these malls is charged heavily and people don’t see any point in paying unnecessarily for parking.

3) HOME DELIVERY- It is a very common practice in the Indian homes that a list of the items required is prepared and given to the shopkeeper over telephone and the list is fully delivered to the home without any hustle. People who have conveyance problem are very much benefited by the home delivery. The local grocer is indispensible. A lot of retail outlets have also started home delivery in order to compete with the local grocers but they provide the home delivery service at some extra delivery charges

4) QUICK BILLING- People do not face the problem of standing and waiting in the queue for billing. It saves a lot of time and energy.

5)EASE OF EXCHANGE AND RETURN-many supermarkets do not provide the facility of exchange or return while on the other hand the kirana stores will never refuse and the customer doesn’t have to face any problem.

6) GOODWILL- The supermarkets can never match up to the interaction and the shopkeeper customer relationship that is established with the neighborhood grocery store. The big brands lack the personal touch which the local grocery shop offers. They know almost all their clients by name and they assist them in buying the right product.

7) A large percentage of the population that is the lower middle class and the poor buy their needs on daily credit. The large store do not have the two rupee shampoo sachet or the smallest bottle of cream or hair oil .This can only be supplied by the neighborhood shop.

8)The middle class house wife would always prefer to buy fruits and vegetables from the local greengrocers even if they slightly overcharge plus a very small thing that makes them happy in buying from the greengrocers is they get some green chilies and coriander for free. Which retail can give this offer?

Just the two things that can go against the small grocery shops are-

1) No major discounts are available

2) Limited variety

The advantages that the large format retailers have-

1) BETTER DISPLAY- All the items are displayed in a very systematic way and the spread out is quite attractive [5] 


3) Good quality vegetables and frozen food

While on the other hand the major disadvantages for the big retailers are-

1) Long queues for billing

2) Difficult to return or exchange products

3) Impulsive shopping

4) Home delivery not common

The local grocers are trying to be in competition with the supermarkets by getting more and more brands in their shops to increase costumer’s choice and they are giving quite a lot of importance to their display [7] .

The bigger brands have such a dominant position in the market that In this atmosphere of unhealthy competition the smaller shopkeepers start using such ways and means that they sell their products under the tag lines and brand names of the known brands and companies but such methods cannot make the smaller shops in the market to survive for a very long time and will finally lead to their declination.

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With the introduction of the malls and super marts there has been an increase in the imported stuff rather than local products, as a result of disparity between the demand and supply of the Indian goods all the high and superior quality goods are being exported for foreign consumption and the poorer quality products are left behind for the consumption of our own people.

So these super marts are basically a platform for the expansion of foreign goods in India and a loss for the Indian market and traders because no one can deny that today India provides the single biggest consumption opportunity in the world. Rather than following trends set outside our country, fashion needs to flow from within our indigenous culture, customs. Indian body sizes, skin color and lifestyle are significantly different from people in the west, so the garments for Indian customers needed to be designed keeping specific Indian condition in mind.

Before the introduction of the super marts in India, the small traders and shopkeepers kept a healthy competition among themselves and the market was not dominated by a single shop because all the shops were at the same level and within the reach of all but since the super marts have come in the market they suddenly became the dominant species in the Indian market as they were within the reach of the higher and the dominant class of people and this marked the beginning of the disparity i.e. who could go to these marts and who could not and this has furthermore worsened the gap between rich and poor in terms of socio-economic and mental status.

The modern retailers, brands and supermarkets invest a lot of sum of money in advertising be it television, newspapers or radio for their promotion and marketing. The smaller brands or the retailers are not able to advertise and are hence being outshined from the market.

I strongly believe that the strength of a good business lies in understanding the needs and aspiration of the Indian customer. The Indian customer is very challenging and it is difficult to completely understand each section of our population. It is hence very important to focus on watching and evaluating the consumption space. The needs of Indian customers are so vast and diverse that it is very difficult for them to be fulfilled under a single roof. The needs of the Indian customer can only be fulfilled by the Indian markets and not by the foreign brands that trying to capture the Indian markets.

The basic rule of the Indian trading industry from the very beginning has been “to provide the ordinary people what only rich can afford”

Indians from the very beginning have been savings oriented and value conscious. We are taught from childhood to preserve everything and nothing is thrown away or wasted. In the previous days the barter system was very popular. People could exchange their old utensils for new steel and the same applied to other products as well for e.g. Clothes. The second hand market was a very popular concept but this is not possible with the bigger and foreign brands.

Large format retailing gained grounds in India at around early nineties for example Shopper’s Stop opened in Mumbai and it was observed that while the new Franchise outlets were driving growth, the older ones were slugging behind and thus began a drop in the sales of the smaller Indian brands and retail stores.

The foreign brands and the bigger supermarkets focused more on filling their pockets rather than building a long term relationship with the customers. There is a total lack of standardization when it comes to display and customer service.

In the supermarkets there is a system of self-service which many people find inconvenient because when the customer wants a particular product and he cannot find it in the display it becomes very difficult and the people who are present there for assistance are not available always and are even rude to the customers sometimes. The small shopkeepers displayed whatever the customers want for example if the customer has gone to a shop to buy fabric the shopkeeper would display all the variety of clothes available but in the super marts there is no effort by the shopkeeper to display anything. All the work and effort has to be done by the customer, he or she has to search for the correct size that is required. This can be quite inconvenient.

A small fabric shop will make its customer sit, offer some snacks or tea in order to build a relationship with the customer so that a one-time visit turns into a lifetime remembrance. Such politeness lacks in the supermarkets and malls.

Such problems were never faced with the small retail shops. The customer gets in hand whatever he or she wants without any inconvenience or rudeness. The small shopkeepers are very particular about the way they interact with their customers because they do not have any other way of promotion or advertisement but they can only survive in the market due to their polite interaction with the customers.

The foreign brands and the supermarkets have been using the Indian customer for their profit and they also do not accommodate the Indian products and Indian brands in their outlets and hence the competition was increasing day by day and the market dominance is slowly being shifted to the bigger retailers.

The small retailers had a spirit and dedication to serve their customers which lacks among the bigger retailers.

Retailing is not just about selling products, it is about selling an idea. People shop when they are depressed or bored not just because they have money but they want to go through an experience.

Retail requires deep understanding of local tastes and preferences which can never be totally fulfilled by the foreign brands.

Even the rich class will admit that when it comes to buying fruits or vegetables, they will prefer to go the local fruit and vegetable market rather than to the modern stores. Every person appreciates the act of picking up the fruit, bargaining for them then he feels satisfied when he gets a good deal on it. And it is true that one can never be sure about the quality and the freshness of the fruits and vegetables available at the supermarkets.

If we will look at the Indian markets, they are very colorful, attractive and they are created by the traders like this to give shoppers a sense of moment, of event, of place.

It is a very strange fact but when the first shopping mall of Mumbai opened (Crossroads), it only allowed visitors who had a credit card or mobile phone. Such were the early days of modern retail in India. It is very necessary that the customer feels comfortable while shopping.

The customer should never get intimidated by the salesman and should be comfortable while interacting with the salesman. The modern retailers and salesperson give more importance to their dress up rather than customer service and this makes the customer feel very uncomfortable.

The malls and the modern supermarkets are often located not within the city but in the outskirts Most Indians do not own cars and hence these malls are not within reach of every person.

Shopping in hypermarkets in western countries is not considered to be an exciting activity and customers mostly shop alone but this concept cannot work in India due to a different lifestyle in India shopping is like an occasion and people like to shop with their whole family. Hypermarkets have long, narrow aisles suitable for individual shopping; these features can’t work in India.

For retailing in such a diverse marketplace like India one has to build one store at a time. One has to understand local consumer’s .But what these supermarkets do that a single store design is opened across the country and hence are not able to meet the demands of the local consumer. The design is not of native origin but their own foreign design which does not suit the local customer.

The customer might go to supermarket for their monthly or bulk shopping but for their daily or weekly purchases, kirana stores are their first choice.

The major threat for the small Indian traders mainly comes from the multinational retailers who do their aggressive buying from a single large company even though there are a large number of small suppliers’ .They does this in order to kill small business.

Global sourcing, unfair trade practices and strong arm tactics used by the multinational retailers pose a significant threat to the small traders in our country.

There is a major debate regarding the opening of retail sector to foreign direct investment (FDI).

This move will lead to large scale job losses. International experience is the biggest evidence that proves that the supermarkets invariably displace the small retailers.

The small retails have virtually been wiped out from the developed countries like the US and Europe.

According to the statistical data available India has the highest shopping density in the world with 11 shops per 1000 people.

India has 1.2 crore shops employing over 4 crore people -95% of these are small shops run by self-employed people.

The South East Asian countries had to impose stringent zoning and licensing regulations to restrict growth of supermarkets after small retailers were getting displaced.

The global retail giants amongst which the top most are Wal-Mart, Tesco and Carrefour will resort to predatory pricing to create monopoly or oligopoly. This will lead to the control of the essential items including food supplies being controlled by the foreign organizations.

The Indian retail market is basically a type of fragmented market which provides consumers with larger options. On the other hand the supermarkets which are a type of consolidated markets make the consumer captive and restrict their options. The Indian customer feels comfortable in the traditional fragmented type of the markets rather than the consolidated supermarkets. Allowing the foreign marts in the Indian market will lead to consolidation. Hence it can be definitely said that international retail does not create additional markets instead it displaces the old existing market.

The trading industry comprises of two sectors-

1) Manufacturers

2) Distributers

The international retail and the foreign brands will make purchases internationally and not from the domestic sources. This will lead to loss of jobs in the manufacturing sector. Studies show that this has been the experience of most of the countries which allowed foreign direct Investment in retail.

If we take example of China, it is predominantly a manufacturing economy and it is the largest supplier to Wal-Mart and other international majors and so China obviously cannot say no to these chains opening stores in China when it is a global supplier to them. India on the other hand will eventually lose their jobs both in the manufacturing and service sector.

The foreign retails like Waal-Marts are trying to capture the Indian market with a much targeted approach. They would first buy raw materials from the domestic the domestic market and sell at a very low prices initially to attract the customers but in the long run of time once they will be able to root out the domestic market they will sell at very high rates and the consumer will be not left with any other choice but to buy the products at a higher cost.

Foreign Direct Investment is even being referred by some as the “tsunami” that will hit the country’s economy. The general response by the traders is that the government’s decision will lead to a disaster for wholesalers and retailers along with the middlemen.

The government has given a decision to allow 51% Foreign Direct Investment in the multiband retail sector. The opposition has asked for rollback. The entry of foreign retailers would hurt the domestic business but the government ruled out the reversal of the decision.

However the Bihar government has taken a stand. The statement given by Modi was, “We are of the opinion that organizations like Wal-Mart and Tesco are not required at this stage as it will hamper small shop owners and farmers.”

And he is blaming the government for the unilateral decision. This is yet another example of the laxity of the Indian government that they did not even take into account the view of the Indian retailers. On the other hand let us take the example of the time when a branch of Wal-Mart was to be set up in Oregon city in the US the people of the city were called for a meeting in the town hall to take a final decision that is they involved the local people in their decision making and ultimately the people of the city refused the opening of Wal-Mart as a retail in their city because of a genuine fear that the already established retail shops and the employees associated with these shops will be the main sufferers and finally the decision of the people was enforced and till date no supermarket has been opened in that area. This is a very big example that even though the parent country to which Wal-Mart belongs is US and then also the smaller townships of US did not allow it to be established in their area how can the Indian customer allow it willingly but the Indian government has not taken into account the views and ideas of its own people.

The government has to clarify the norm requiring foreign retailers to source 30% of their product from micro and small entities of the Indian manufacturers but a commerce ministry note had said that 30% sourcing from micro and small enterprises could be done from anywhere in the world and was not India specific but later they issued a clarification and the words “anywhere in the world” was dropped. Even this clarification has failed to break the logjam in the parliament.

The statement given by Mulayam Singh Yadav,”Our stand is that we will burn any such shop in the state and we will not allow it”.

The statement given by West Bengal’s Finance

Minister “We have no evidence to support that it will be beneficial for


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