Tuesday, September 18, 2012

FDI in retail

I'm not very good at understanding economic theory outside my household budget (although I'm pretty good at balancing that when I want to).

Reading about our state government's hard stand on FDI reminded me of something that truly bemuses Vicky and me: we are members of the nearby Metro Cash and Carry and usually do a staples run there every 5-6 weeks. When this wholesale department store came up it was touted as the cheapest source of export quality goods. The truth is, we find a lot more variety in New Market and everything I have compared so far has turned out cheaper at Chandni, Poddar Court or New Market. Sometimes by quite a hefty bit. In fact, sometimes the usual price of an item in these places beats the 'special' discounts at Spencer's. Plastic cupboards that had a couple of thousands knocked off their marked price in Spencers turned up cheaper by another couple of thousands in Poddar Court. Tubelight holders with 'free' tubelights turned out to cost exactly the same when our electrician brought them from his shop as when I had priced them on 'discount' at Metro. And do not get me started on the cooking chocolate at Johnson's, New Market vs Metro.

So I wonder, as the average householder who truly does not understand national economics but needs to keep a household going, how are these big retail chains improving things for me? The only reason we do go to Metro is that it is a 3-4 minute away. Otherwise the savings seem to be on par with the discounts I get from the neighbourhood grocers. If anything, I tend to save money at the neighbourhood grocers because I can buy as little as I need, as often as I like. Is it possible for the big chains to provide that kind of convenience?


Saptarshi Chakraborty said...

Agree with you. But chains like Walmart work in a far more disruptive way. The overtake the entire supply chain, right from the source of production and slowly start dictating what the producer (farmer, manufactuer) should produce. I try not to buy anything from places like Spencers, or Big Bazar, at least nothing that I won't get in smaller stores or New Market. And really, what can you not get in New Market? :)

Anonymous said...

The supermarkets beat the local shops through the volume they trade in which keeps the cost down. I can't comment about the situation in India particularly though. I usually try and support the local shops but in the UK there is an opposite problem in that it is more expensive to support local shops than go to the nearest Tesco or Asda.

Sue said...

Saptarshi -- True. What can you not get in New Market. :)

Wehearttravelling -- We had expected cheaper prices at the supermarkets in India. They certainly offer more convenient shopping. However, their pricing is not only more expensive in the long run but also forces you to buy in bulk what you may not really require in bulk (spices, lentils, oils, flours -- to name a few things off the top of my head).

Discovering M said...

I am a first time visitor here :)

The Walmarts probably would be able to do things cheaper for reasons explained by Saptarshi.. so you will in the end get cheaper prices.

The Walmarts tends to kill the corner shops and the smaller 'mum and dad' stores in the long run. But in India I am not sure.

Sue said...

Discovering M -- I find that the large chains also dictate what the consumer must buy, even though theoretically their inventory ought to be far vaster than cornershops.