In the year 1977 Coca-Cola exited the Indian soft drink market. As soon as the giant left, others came out to play. Mohan Meakins, Modern Bakers, Pure Drink; Companies you won’t even recognize today, and brands you might have never heard of ruled the Indian soft drink market from 1977-1988. Why today, soft drink brands ‘Double-7’, ‘Mary & Puck up’ or ‘Thrill’ doesn’t make any sense to us?, Why today, we don’t even know that McDowell’s at one point of time owned three different soft drink brands. It is because in 1988 and 1993, two companies entered the Indian market, which swept the competition clean. These two companies own more than 96% of the market today, and most of the soft drink brands that played the field in 1977-1988, are either extinct or owned by either of the big two. Was this good or bad is a judgment call, it was definitely bad for the small Indian companies, and they are not lying when they say it was unfair that a company from a developed country; owning all the resources and technology, must not be allowed to compete with us, it will be an unfair competition. We studied a concept in physics called a “Frame of reference”, the frame of reference is a set of axes within which to measure the position, orientation, and other properties of objects in it. At that point of time, the frame of reference for most of the Indian soft drink companies was the Indian market, while for Coca-cola and Pepsi the frame of reference was the whole world.
This is what we are facing today, the frame of reference for the Indian modern retail space, is the Indian modern retail space only, the competitors fight between themselves to earn a chunk of the market share. But what will happen when a bigger player, big enough to disturb the harmony with which the Indian companies have been operating today, enters the Indian market? It will be unfair again to the existing local players, the MT stores and the kirana stores, but that does not mean that we continue functioning at our levels of mediocrity when we know that a better player is out there, who is experienced and is perhaps the best in the business, way better than the existing players, waiting for an opportunity to enter the market and change the rules of the game. Why do I say they are better? Let’s simply see a comparison.

What does a consumer look for in a retail store?
• Low prices
• Broader choices
• Quality of the product
• Quality of service

We, Indians know the value of the first point. Walmart’s USP might hit at the very core of the common Indian expectation. Wal-mart is the master of the well known concept “Economies of scale”, its concept of ‘EDLP’, “Every day low price”, makes it the King of modern retail. Wal-mart’s strategy is full-proof, one cannot compete with Wal-mart head on, Wal-mart’s size and reputation helps it achieve the lower price mark, as it purchases in volumes. Any competitor to compete head on will have to purchase in volumes greater than Wal-mart, which means overpowering a company whose revenue per year is greater than the economy of Sweden (23rd largest). Its highly sustainable model is the key to its success. The bigger they become, the greater is the barrier for the competition. There are two things which are very core to the company, it is the ‘secret formula’, only that it is widely known, and even knowing it doesn’t mean you can compete head on.

1. Buy directly from the manufacturers to keep down the cost (eliminating middlemen)
2. Purchase from a manufacturer only when you are sure that no one else will offer it at a lower price.

Walmart is a leader in discount retailing.Similarly, Carrefour, on the other hand follows a similar approach, and it operates in many forms of modern retail which are described below. Please note that Carrefour is the second largest retail group in the world.

Hypermarkets: Expansive retail facility carrying a wide range of products under one roof, including full groceries lines and general merchandise. In theory, hypermarkets allow customers to satisfy all their routine shopping needs in one trip

Supermarkets: A self-service store offering a wide variety of food and household merchandise, organized into departments

Cash and carry: A form of trade in which goods are sold from a wholesale warehouse operated either on a self-service basis, or on the basis of samples (with the customer selecting from specimen articles using a manual or computerized ordering system but not serving himself) or a combination of the two. Customers (retailers, professional users, caterers, institutional buyers, etc.) settle the invoice on the spot in cash, and carry the goods away themselves.

Discount: A type of department store, which sells products at prices lower than those asked by traditional retail outlets.

Convenience: A small store or shop in a built up area that stocks a range of everyday items such as groceries, toiletries, alcoholic and soft drinks, and may also offer money order and wire transfer services. They differ from general stores and village shops in that they are not in a rural location, and are used as a convenient supplement to the main shopping rather than being the main store. A convenience store may form part of gas/petrol stations.

Big Bazaar (The retail giant in India) rules the retailing sector in India, owned by the Future group; it is one of the flourishing arms of the Kishore Biyani enterprise. Carrefour has already opened two cash & carry stores in alliance with the future group, in India. (Reference), And Walmart is already present in India with its nine cash & carry stores after an alliance with the Bharti enterprises.

So the question is why such a ruckus when the retail giants are already operating within the country?

The answer according to the opposition parties is that the retail giants will crush the small and helpless kirana stores. It may be true to some extent, if Walmart opens a discount store in India, people may prefer it over the kirana stores owing to the low price points. But wasn’t the same question raised when Reliance fresh was launched? The big brains predicted that it will kill the livelihood of farmers, but still they exist in harmony. The traditional Indian women prefers to purchase it fresh, first hand from the ‘sabzi mandi’, while others who prefer shopping experience over anything, prefer Reliance Fresh.

And the same may be the case for Walmart, Walmart or Carrefour’s discount stores are located far away from the city owing to the large warehouses. So even if a percentage of the population will prefer purchasing their monthly household by making a trip downtown, for every other need they will return back to the good old kirana store. Obviously the Kirana store will have to suffer, like it did once when big bazaar and other indigenous stores opened. But ‘going extinct’ is a long way to go for the kirana stores.
Maybe an increase in competition will motivate the kirana stores to improvise, increase their product offerings, service quality etc. Just denying entry to the competitor to protect the interests of kirana stores is wrong. Maybe, the government must make the change more gradual, allowing few modern retail giant’s stores to open at first so that the kirana stores have enough time to adapt to the change. But totally denying the entry is wrong, everybody knows that it’s a rat race, but the pace of progress is defined by the speed of the fastest rat.