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Retailing

This document discusses the pros and cons of foreign direct investment (FDI) in Indian retailing. Some benefits mentioned include bringing advanced supply chain management and technologies, introducing capital and expertise, and creating new jobs. However, disadvantages include the possibility of many small stores closing due to competition, a shift to capital-intensive production harming employment, and potential monopoly control by multi-brand retailers. The impact on traditional stores is also examined, with some studies finding their incomes declined by 20-30% near supermarkets.

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29 views7 pages

Retailing

This document discusses the pros and cons of foreign direct investment (FDI) in Indian retailing. Some benefits mentioned include bringing advanced supply chain management and technologies, introducing capital and expertise, and creating new jobs. However, disadvantages include the possibility of many small stores closing due to competition, a shift to capital-intensive production harming employment, and potential monopoly control by multi-brand retailers. The impact on traditional stores is also examined, with some studies finding their incomes declined by 20-30% near supermarkets.

Uploaded by

vinit Patidar
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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AMITY GLOBAL BUSINESS SCHOOL INDORE

FDI IN RETAILING-PROS AND CONS


IMPACT OF ORGANIZED RETAILING ON SMALL GROCERY
STORES
SUBMITTED BY
SUBMITTED TO
ALISHA MICHEL
DR .RAJEEV SIR
FDI IN RETAILING –PROS AND CONS
Advantages
 With foreign companies coming to the retail space,
it might bring in the best of technologies like
cooling machines and storage devices to India,
thereby reducing food wastage.
 ‘FDI in retail would mean the re-birth of an
advanced supply chain management (SCM)
structure. This new management system is
expected to bring economies of scale, benefitting
the farmers of this country
* With operations research and lean
management, the economy can potentially
witness great
benefits.
 • As foreign retail giants have expertise in managing
retail businesses which are relatively a new idea for India,
FDI will help resolve the loopholes in the present supply
chain management.
 • Another benefit India will witness is the introduction
of advanced technology and the infusion of capital inflow
from incoming countries. Hence, for the success of retail
business in India, FDI in stores, the investors would have
improved business practices and highly skilled technical
specialists to control the operations.
It will bring in new employment opportunities in India,
which is highly needed to channelise demographic
dividend.
 Disadvantages

 As has been observed in the Multi-National Corporation culture in India, it


is Indians who do all the work whereas the foreign company enjoys all the
profit share. Additionally, instability has been observed in the foreign
exchange rate when the company takes back profits to its home country,
thereby harming India. 
 With retail giants coming to India with the ability to sell at cheaper rates
than mom and pop stores, many small businesses will go out of business.
It will lead to a massive loss of jobs and discomfort to a large chunk of
society. 
 To match up with the sophisticated technology used abroad, India which is
a labour-intensive country will move to capital intensive methods of
production.  
 As the debate is all about multi-brand retail, with that being allowed there
will be a monopoly of such stores over the country which could have a
negative impact on the Indian trade. 

Impact on Traditional retail stores
According to the report of Indian Council for Research on International Economic Relations
 

(ICRIER)the unorganised retailers in the vicinity of organised retailers saw their volume of
business and profitdecline. However, the report supports that there is no employment loss in
this case. It is believed that
 both the formats can co-exist. In fact, when modern trade help create new categories, the
spillover effectis helping generate more demand in kirana stores as well.
 Other
studies have estimated that traditional fruit and vegetable retailers experienced a 20-
30%decline in incomes with the presence of supermarkets.According to one study by Nelson,
 since2006, when most big retailers either entered the retail space or began expanding their
network, sales in local kiranas have grown in the low single digits even less thanthe GDP
growth rate, while modern trade has grown in strong double digits, though at a much lower
base.For instance, sales at modern stores grew 34% in 2006 and 29.3% in 2010. Traditional
stores couldincrease sales only 1.5% in 2006, but improved the growth rate to 6.2% last yea
 

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