Monday, November 28, 2011

The controversy over the decision to allow 51% foreign control of multi brand retail stores is either because politicians have never gone shopping for groceries or because it is a conspiracy to prevent the passage of the Lok Pal bill. Stand alone stores need a lot of land and with land prices at fairy tale levels few companies would want to take such a risk in such recessionary times. That is why in Delhi retailers such as Big Bazaar have their stores in shopping malls. Every mall charges at least Rs 30 for parking and up to Rs 60 at weekends. Most of these malls are constructed in such a way that taking heavy bags of groceries back to the car is a major problem. The small neighborhood stores are conveniently near so that multiple trips are possible and they will usually deliver to your home till late evening. Giants like Tesco, Walmart and Carrefour have stand alone stores with large parking lots and their business model encourages purchase of large quantities for it to be profitable for customers. Such stores are likely to be on the outskirts of cities so reaching them will be an effort with poor roads jammed with traffic. Shopping in such stores is very time consuming because of their sheer size and number of products on offer and, finally, you need a car to bring home large heavy bags of shopping which will rule out families relying on 2 wheelers for transport. There is, therefore, no reason for the hysterical reaction to the announcement. What the Congress is not saying is that small shop owners do not pay any tax which large stores cannot avoid. So the government stands to collect more tax while avoiding the Lok Pal bill. The entire farce is to fool the people.

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