Benefits of big time Retailing ....

Walmart entry into the retailing business is scaring small time traders
and retailers in India. The trading community is worried that their
present role of acting as middlemen in the supply chain (aggregators) will become inconsequential in the coming years with the entry of Walmart or Reliance. Is this fear misplaced ?

Drawbacks of the present system :

The
present agricultural and commodity supply chain in the country is
working at sub-optimal levels. Particularly the fruits, grains, pulses
and vegetables supply chain is incurring heavy costs at unscientific
storage and transportation of perishable goods and the subsequent
losses due to improper storage and handling,transportation.

The
lookout for the government is to increase the efficiency of these
operations and thus bring more edible fruits/grains/pulses in the
market at lower prices. There are enough stocks of food grains in Food
Corporation of Indiagodowns to complete a trip to the moon, one way, still we have thousands of families going to bed daily across the country without a square meal a day.

It is in this context that that the government needs to seriously
consider ways and means to increase the efficiency of it's existing
warehousing, transport and storage operations. It is here that
retailing giants likeMittal-Walmart, Reliance etc are set to enter the Indian market.

Best Practices :

Big
retailers have some of the best practices in the market, be it
purchase, storage or transportation. They are known to give better
remuneration to the farmers for their produce, resulting in prosperous
farmers. They also encourage small farmers to get together and farm in
larger areas, resulting in better productivity of land. Exceptions are
emerging from different parts of the country where big business houses
are known to purchase large tracts of land, often inthousands of acres, displacing the existing farmers and their livelihood, by givinjg them meagre compensation. Such anomalies can be corrected by sincere governments.

Purchasing in large quantities, facilitates transportation and storage in large quantities. Cheap, safe and multimodal transportation, proper storage environments , often conditioned and refrigerated, ensure that the product lives are extended to facilitate aggregation and transportation over long distances.

Another benefit of big retail;ing is the ease with which new technologies become industry standards. Walmart
being a big player gives leadership in introducing new technologies. It
directs it's vendors, in a positive sense, enabling absorption of high
technology, making it industry standard. The examples of introduction
of bar codes and more recently the Radio frequencyidentification Devices (RFID
) for identification, tracking and keeping count of inventory helps in
efficient inventory management. This results in less wastage and
efficient retrieval of items from store and cost effective purchase
policies. As a whole this results in very cost effective operations.
Big retailers are thus able to offer items at low costs to the customer.

( to be continued..)

George easaw