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Dr. P.V. Viswanath |
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How Asia shops: Supermarkets versus sentimentalismMay 28th 2008, From Economist.com |
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MANY newcomers to India complain loudly about the inefficiency of the nation's retailers: the poky shops inhabited by sleepy shopkeepers and dusty merchandise. They might be more forgiving if only they acquired a taste for paan. Betel nut wrapped with seasonings in a leaf, paan is a popular digestive that Indians enjoy tucking into their cheek and chewing slowly after a late dinner. Long after the malls have closed for the night, the paan-wallah, perched by the road, lays out his leaves and briskly prepares packages to order: with tobacco or without, dry or wet, spread with rose chutney or sprinkled with fennel seeds. If you have a craving for the stuff, made fresh your way, Indian retail is hard to fault.
How long can they hold out? Organised retail is an “inexorable” force, according to Rajiv Kumar, director of the Indian Council for Research on International Economic Relations (ICRIER). Which this week released a long-awaited study of the phenomenon. India's small shops will be damaged, the report finds, especially in the first year or two, but they will survive. Many people assume that Asia's shopping habits are peculiar to the region and uniquely resistant to change. Don't Asians love to haggle? Don't they enjoy testing the firmness of each mango and sampling the smell of each musk melon? But these pleasures are prized everywhere (if not by everyone). Hence local, independent stores that sell to discriminating customers have survived even in America and Europe. Moreover, Asia's “timeless” shopping habits are changing as quickly as the West's did. China had no supermarkets in 1989; now the organised sector accounts for a fifth of the market. Two of the report's authors, Thomas Reardon of Michigan State University and Ashok Gulati of the International Food Policy Research Institute, point out that America once shopped much as India does today. The first supermarket in the United States was opened by A&P in 1936. Mr Reardon's father remembers those days of mom-and-pop stores, when pop manned the till and mom retrieved the products from the shelves. Street peddlers trundled by with push carts. Milk and dry goods, such as tea, were delivered to your home. The memories of Mr Reardon père match the present realities of India fairly well. But as America grew richer, people started buying more processed foods, which supermarkets could sell more cheaply because they could buy them in bulk. Refrigerators spread, allowing households to shop only once a week, not every day or two. And women entered the job market in large numbers, where they found better uses for their time and talents than sizing up a cut of meat or double-checking the shopping bill. What most distinguishes South Asian shopping is not culture, but abundant labour and onerous regulation. The number of human transactions required to buy a packet of milk or a loaf of bread in India can be bewildering: a boy gathers your order and dusts it off, another man handwrites the bill and tots it up, a third hands you your change, if they have it. But Indian shops employ so many people because they can. The family members who help out at the store often have nothing better to do. Likewise the customers who shop there rarely have to be anywhere else anytime soon. India's government is also partial to small stores. They pay a lower rate of tax, when they pay at all, and observe a looser standard of hygiene. There is an undeniable skill in gripping a knife between your toes as you separate the breast from a chicken. But this sort of thing, common to Indian butchers, is frowned on elsewhere, where street stalls are considered dirty, inconvenient and antique. Since 2002, China's government has barred new wetmarkets from opening in cities. Places like Huangzhou have bulldozed some and sanitised others, providing better lighting, paving the ground, tiling the walls, and separating cooked from uncooked food. The Chinese government has also auctioned some wetmarkets off to supermarkets. India's government is far more indulgent, if only because it knows the kirana stores can still mobilise public sentiment on their behalf. Indeed, the government commissioned ICRIER's report in response to angry protests by shopkeepers at the incursions of supermarkets onto their patch. But if that report is right, India's retail market will grow by 13% a year for the next few years. Mom and pop simply cannot meet that demand. The government will need to remove the shackles on modernised retail, which the report projects will claim about 16% of the market in 2012. The government also needs to embolden unorganised retail. The report laments that kirana stores cannot raise the money they need to expand. Their stock, which is perishable, cannot serve as collateral and their daily takings are too small to interest the big lenders. Given a chance, small retail might become organised retail, rather than succumbing to it. After all, Indonesia's leading supermarket chain, Matahari, started out as a small shop in 1958. And as the ICRIER report points out, even Sam Walton, founder of the dreaded Wal-Mart, began as a kirana man, minding a tiny five-and-dime store in rural Arkansas. Something for every paan-wallah to chew on. |
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Questions:
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Such charms are often invoked to explain why South Asia has yet to experience a supermarket revolution. “Organised retail” (ie, spacious shops with clean shelves and jingling cash registers, where you are left to walk the aisles alone) claimed only 4% of India’s vast retail market and 1% of Pakistan's in 2006. The rest was left to independent family-run shops, called kirana stores, as well as the paan-wallahs, chai-wallahs (tea sellers), vegetable stalls and fruit carts.