Monday, May 25, 2009


People with communist bent of mind have always associated the rapid growth of retail chains with mindless growth of capitalist greed which tends to make profit at the expense of the common man. In some states of India like UP and West Bengal, there were large scale protests over the opening of outlets by some large scale retail formats like Reliance Fresh etc. Unfortunately the company had to shut those outlets in view of the widespread protests. But, the moot question remains to be asked. Are these chains against the overall benefit of the common man? Do they really exploit the common man? These are fundamental questions the answer to which can be both yes and no depending on which side of the divide you are standing on. While there is no doubt that the consumers don't see these retails outlets as a part of the large corporates sinister design to fill their coffers by exploiting them, as is made out by the protesters. At the same time , some would argue that these large scale retail formats take away the livelihood of the traditional "mom and pop" shops or your traditional kirana stores. At the outset , this might look like a credible argument, the fact is that there is no credible evidence which strongly proves this.
My argument is that at the end of the day, the decision should be based on what is in the greater interest of the society. The consumers benefit a great deal because of these malls or retail outlets. Some of the benefits that accrue to the shoppers shopping at these malls are as under:-
1. Lower prices - The prices of the goods at the large malls/retails outlets are comparatively lower than the prices outside in the normal stores. This is because of the fact that these stores buy products in bulk from companies and because of the economies of scale they are able to negotiate better price from the manufacturers. Manufacturers gain due to higher volume sales while the retailer gets better price which he passes on to the ultimate user. This is a win-win for all the parties concerned.
2. More variety and range -The malls also offer better range of products as compared to the traditional "mom and pop" shops. These stores have better variety offering a greater range of products for the customer to choose from.
3. All under one roof - The biggest USP of the malls is that they tend to offer everything that one needs under one roof. One can shop for clothes,grocery, food items, gift articles,books, movie, etc all under one roof. This positions them as "one stop shop" for the customer which results in better shopping experience for the customer.
4. Loyalty discounts- Most of these stores also offer loyalty discounts to their customers who are regular shoppers from their stores. This kind of facility is not available in a regular shop. Stores like Shoppers stop, Pantaloon etc have cards for their loyal customers and offer extra discounts to the holders of these cards on their purchases .
5. Promotional offers - Other than the regular loyalty discounts, retailers at times also offer extra promotional offers to boost sales. For example, Pantaloon group is known for its special "Sabse Sasta Din" campaign in India on 26th january and 15th August of every month. On these 2 days, they offer great discounts at almost every product. This offer is hugely popular among the shoppers. Few retailers offer extra reward points on purchases, some offer extra discounts on use of particular credit cards etc.All these result in savings for the customer.
6.Doubles up as outing as well - The visit to the nearby mall for shopping purposes also doubles up as a recreational outing for the whole family as well where they can have fun while shopping. Kids can play games, family can have dinner together, watch movies etc besides shopping . This is an experience which no "mom and pop store can provide.
7. More taxes for the government - Since these retail chains are from corporates, they do pay corporate tax to the government of India. This money can be used by government of India towards social sectorss like education, rural employment etc. The "mom and pop" shops in India indulge in large scale tax evasion and thus the government does stand to gain a lot from these stores.
8. Expands the market - The argument that these stores will result in closure of mom and shop stores also seems far fetched as in western countries these formats have not really "killed " smaller stores. These large chains do expand the overall market and also provide opportunity to a lot of people in supply chain management . The farmers too get better price for their proceeds from the large format stores.
After listing down the advantages of shopping in a mall, it would be fair for me to point out few disadvantages to give you a balanced picture . There are no major disadvantage, but for the regular criticism against these stores that they encourage people to overspend . Overspending is not a nice habit to have and can be detrimental to your monthly budget. But this can be easily tackled by your discipline. My suggestion would be to have a list of stuff that you want from the store ready before you leave home . And once you are in the mall, ensure that you buy nothing which is not in the list.
With little bit of discipline one can easily save a lot of money shopping from the large malls . There are lot of people who have this preconceived notion that shopping in large air conditioned malls would be expensive. They sure can be if you do not do our research well and end up shopping for things which you don't need. But for smart shopper, it does offer a great avenue to save some bucks from his/her monthly grocery bill.


  1. Interesting! I can't imagine how all this will shake out in India, but I can say that in the U.S., when a big box store moves into a market, it does indeed underprice all the competition. The lower prices drive local merchants out of business. Then, when the local competition is gone, the big national store raises its prices, often to levels higher than the mom-and-pop businesses ever charged. Services is terrible, and product quality can be appalling. After getting a bellyful of that over the past three decades, I shop local whenever I can.

  2. I would like to read reply from Rajeev on above comment...
    article and above comment both seems logically correct....plz clear my confusion

  3. Well the problems with organised retail in US is for real and that is because of the fact that they have almost been able to wipe out mom and pop shops giving them huge advantage of market share which they leverage for their benefit. Same may not be possible in India due to regulatory issues. Retail being sensitive sector will continue tp be regulated tro ensure that it is free from these ills.

  4. ya....probably in India, there would be some regulatory....
    Thanks Rajeev

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