Last October, as the five-day Hindu, Sikh, and Jain Festival started many Indians knew it was time to buy gifts for family and friends. One person, Rajlaxmi Pandit went on a 45-minute ride to the Delhi Metro and hopped to the Big Bazaar, one of the biggest shopping centers that offer everything – from saris to neckties and foods among many others.
After a few minutes in the center, she decided not to buy anything and immediately went to the noisy street of Bhogal. There, shopkeepers were calling out her name as she went inside each bargain stores. Upon looking at the list of price from the Big Bazaar, she decided to pick a $100 dollar cellular phone for her friend, as it was some $5 dollar cheaper. Moreover, the shopkeeper will have it delivered at her home just a few hours after.
Above, is actually the situation in India today, which can be attributed to the tricky law for foreign retailers. One of their regulations says that big-box stores such as Wal-Mart or Carrefour are only allowed to partner with Indian companies in the wholesale sector; which essentially means they cannot sell outright to direct consumers. In contrast, single-brand retailers such as Guess, Levis, or Esprit can sell directly to consumers but not without having and Indian partner.
What does this indicate? It indicates that foreign owned retailers in India are simply out of reach. For instance, when Wal-Mart decided to open its first Indian store, it was only allowed to sell to people who registered by showing they own a retail outlet, also known as Kirana store.
It is the local industry that dominates the country’s nearly $500 billion retail industry. Companies such as Future Group, Reliance ADA Group, and Vishal Retail rented millions of square feet of expensive spaces around the country. When the economy slowed down, many of their branches have to shut down though.
And it turned out that the mom-and-pop stores ruled out in this tight economic situation. If there is one thing that we can call a lesson here, it must be being big is not necessarily safe!