One of the important issues being discussed these days is how retail sector can be opened up and how much and in what sector FDI should be allowed? Some proponents of retail say there is no harm opening up retail for luxury or single brands.
I would tend to think there is no harm opening up retail even in food and groceries where kirana and local mom and pop stores operate. At least not unless the following things also happen:
- (Higher) Availability of power so that longer home refrigeration becomes possible
- Better roads and parking space for shoppers to travel and park vehicles
Without good roads and parking at the store/mall, it becomes difficult for shoppers to buy stuff easily. And without guaranteed power, how long can you store your food in the fridge, much less freezer? Without buying in bulk, there is that much less incentive in making a cumbersome trip to the superstore.
Contrast that with the alternative. A local store that will deliver at home even small value purchases, give credit, and be available for service from morning to night.
While retail sector is being touted for its beneficiary effect on supply chain etc, what about the last mile? That’s where the poor infrastructure makes it uncompetitive for large stores to operator, and makes the local store owner more useful to households.