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Looking back :: Indian Supermarket rise
Saturday, 26 May 2007
During our daily search for food in India we’ve been in and out a lot of small grocery / general stores. In all it takes quite a while before we find most of the things we need. However in Amritsar, Jodhpur, Jaipur and Agra we’ve come across  supermarkets based on the “one-stop-shop” concept in the West. Big Bazaar, Vishal, Reliance Fresh to name a few now emerging in India. This kind of shopping is much more easier, fixed prices, cleaner, faster shopping and a bigger assortment. And it seems the average middle-class Indians appreciates this kind of shopping too. However this development is pretty bad news for the small grocery / general store in the cities of India.
The Indian supermarkets clearly targets the middle-class society in India, the people who have more money to spend compared to the 360 millions (1/3) who live in poverty. The Big Bazaar superstore in Agra creates a very sharp contrast with the average life in the Indian cities. It’s near the Taj Mahal and close to a slum where the “penny economy” is the only way of living. (A penny economy is where practically no-one goes anywhere, it’s barely enough for living and that’s it.)

The big Bazaar superstore is in an area sealed of for the poor Indian. Guards are there to stop those we don’t fit the shopper profile. Inside it’s like in Europe. Incredibly clean with modern materials plastered with the usual big advertising signs of Levis, KFC and so on. Especially the clean floors creates a very sharp contrast with the average street scene in India – where dirt and rubbish is so common.

The first thing what struck us: A crowd of employees all around. Everywhere we looked, people in company clothes standing around, talking, doing something, anything. There were so much employees, it was hard to see the customers. Ok the place is brand new but so much employees? Really mind boggling.

The Indian people we saw in here where clearly sight seeing. Groups of Indians closely walking together looking around, gazing at the stuff on display and very uncertain how to behave. Some got help from  guards at the escalators to help them onto the scary moving stairs.

Back at our truck we munched a little on the Big Bazaar experience and looked back at the other new supermarkets we saw. Somehow it didn’t feel right to us, such extreme differences between the old style grocery store and these new supermarkets. No doubt, we see the Indian middle class go to these stores, but what about the many small grocery shops? They surely get hit bad mainly in the cities, their best customers now go somewhere else.

It’s a development which has changed Europe in the 60 and 70’s, but in India it’s not like Europe. The small grocery / general store in India cities is pretty much everywhere. When you see one, there are at least a few more in the same street. They offer a limited assortment and usually their location is among the dirt and rubbish of the street. On top of that haggling (especially for us) is the norm to get the MRP (Maximum Retail Price) printed at the products. For us its usually done in a crowd of people just there to look what we buy at what price.

In Jaipur we read there have been protests staged by vegetable and fruit shop owners at a Reliance Fresh store. We were there at the same time. This chain is selling fruit and vegetables in Jaipur for more or less the street price.  You actually get to see the real price. A crowd of middle class Indians were buying their veggies and fruits here. Local shop owners see their turnover tumble with 50% while having to throw away their unsold stock according to the article. Needless to say, these people are poor – having to ditch their products cuts their finances deep.

It’s the day after the Holi festival. Again a ride to the Big Bazaar in Agra to get a few things for our household. It’s busy, incredibly busy! Big Indian families come to the store for sightseeing, not to buy but to look. They gaze at the products, look at the few people with shopping carts (specially the one of a foreigner) and see what they buy. Clearly they have never ever seen this before.

Big Indian families appear at the cash register with one bottle of coke or a bag of chips. Having no idea what so ever about having to wait for your turn. Instead they crowd the cashier “Indian style” who is already irritated, telling them to queue up a million times and wait for their turn. Then having paid at the electronic – scanner cash register they crowd the exit and look back – again gazing at what they saw. A totally amazing experience….for them but also for us.

We munch on this experience a bit more. Suppose this trend of the Indian supermarkets continues, as it did in Europe. It’s clearly has potential in the Indian cities. The small shops loose their best customers who are now in the big supermarkets. They probably fall back into an even smaller penny economy now with poor customers only. Most of them probably get hit hard instantly with only very little money left to live on. Just like the veggie and fruit sellers in Jaipur complaining about Reliance Fresh bringing down their market. Maybe the best of the small grocery / general stores survive and serve as a bigger poor mans general store.

To us it seems like a bigger split in economies in the Indian cities. The penny economy with little prospect on improvement and the middle-class economy with growth and prosperity. It’s a worrying thought thinking about the sheer number of people in India living in poverty. They can see the shiny new supermarkets displaying incredible wealth but they are locked out. 1st as customer (no money, no access), 2nd as possible employee (no education) and 3rd as entrepreneur (no access). It’s a closed middle-class economy sealed of by walls, gates and guards.

And that’s a huge difference with what happened in Europe. Supermarkets are not sealed of area’s, anyone can shop there, also poor people. The gap in economies is less because of many factors. Somehow this new supermarket development in Indian cities doesn’t feel right to us, it just seems too early. Too many people are locked out of it, but still it’s a potential profitable middle-class market.

Anyhow, maybe the trend is unstoppable. Maybe this new class economy somehow leaks money into the penny economy in a way we can’t see. But somehow growth got to start somewhere with new businesses and do things differently. And either way there is always someone left behind. In this case it’s probably a couple of million people.

However, we ask ourselves with the big numbers of India’s poor will some sort of self regulation (evolution, revolution or a revolt) make the distribution of growth more equal? We don’t know…

Read more here.
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