They don’t want you in California…
They don’t want you in Chicago…
The opening of a Walmart store in Chicago’s Austin neighborhood in 2006 has not increased retail activity or employment opportunities, according to a study by researchers at the University of Illinois at Chicago and Loyola University Chicago. The study found that stores near Walmart were more likely to go out of business, eliminating the equivalent of about 300 full-time jobs — about as many as Walmart initially added to the area. The findings support the contention that urban Walmart stores absorb sales from other city stores without significantly expanding the market, said study co-author David Merriman, head of the UIC department of economics and professor of public administration.
They dont want you in East Oakland:
They dont want you in San Diego…
They dont want you in Delray Beach…
Walmart kills plans for Delray beach superstore in face of residents’ protests.
They dont want you in Taos, New Mexico:
Learn Wal-math: Walmathematicians only know how to add. They never talk about the jobs they destroy, the vacant retail space they create, or their impact on commercial property values. In our town, the company agreed to pay for an impact study that gave us enough data to kill three Wal-Marts. Dollars merely shifted from cash registers on one side of town to Wal-Mart registers on the other side of town. Except for one high school scholarship per year, Wal-Mart gives very little back to the community.
They certainly don’t want you in New York City…
Oh hey, is this why you need to come here?
KAFILA - COLLECTIVE EXPLORATIONS SINCE 2006 
There is a strange Hate/Love equation between the people and Manmohan Singh
When the people all over the world
(and that included the people of India,
obviously,
but even obviously things need to be stated these days0 had through popular consensus chosen Bush as the most hated american president ever
Man Mohan Ji went to the US to tell Bush that he is loved by the people of India
And now when the whole world
and surprise surprise
the People of India as well
express their rejection of Wal-Mart
Man Mohan Ji
Wants to embrace Wal-Mart
is it some kind of complex that
Old Man Sigmund Missed ?
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It’s true that here in America .. WalMart faces a lot of opposition. However if WalMart is so evil – why do you think so many people shop there? The real consumers who need products at a decent price all shop at WalMart. The people who can afford to give WalMart the slip shop at Target / Trader Joes / Whole Foods – and then complain about WalMart.
Its true that WMT affects small shops .. but it also provides lower prices – thus benefiting consumers.
Also – if Walmart is so bad .. are Reliance / Big Bazaar stores any better?
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Your second question first: “if Walmart is so bad .. are Reliance / Big Bazaar stores any better?” See Shankar Gopalakrishnan’s post on kafila especially his demolition of the myth “Corporate Retailers Already Exist, So FDI Will Not Cause Additional Damage”.
As for your first (why do so many people shop there) – it’s not true that only people who can afford to shop at Whole Foods etc are against Walmart. Just one instance, in California the majority black and Latino city of Inglewood voted down a Walmart sponsored referendum to open a supercentre there. So confident was Walmart that it sponsored a referendum! Which it lost.
Tom Slee, in his book “No-one makes you shop at Walmart”, uses game theory to show how perfectly rational behaviour can create an intolerable situation. In his Walmart example, he basically says, let’s say you are happy about having a vibrant downtown of independent shops. Then a Wal-Mart opens up on the outskirts of town. You begin shopping at the Wal-Mart because the prices are cheaper and you can still walk through the vibrant downtown when you like. But with everyone buying things at Wal-Mart, the downtown stores can no longer afford to stay open and the center of your city turns into an empty husk. You’d prefer to have the vibrant downtown to the Wal-Mart, but nobody ever gave you that choice.
Walmart eventually wipes out small neighbourhood shops, and eventually people are left with no choice but to shop there. As for the supposedly lower prices, that too is a myth. Shankar’s research in the post cited earlier shows that data from developing countries reveal that prices in supermarkets are generally higher than from existing retailers. Certainly, there is no data that shows consistently lower prices offered by corporate retailers, he says.
Please read his post before coming back with another predictable objection.
I’m intrigued by the a priori justification of Walmart by ‘desi capitalists’ in general. It seems that no argument will work, no data from anywhere else in the world will make them even blink before they smoothly slide into the next ghisapita old argument for corporate retailing. I’m intrigued basically because the core idea of capitalist economics is that ‘there aint no such thing as a free lunch’. So someone must be paying for the initially lower prices offered by corporate giants such as Walmart. Who could that be, I wonder.
In the US, multi-million dollar corporate welfare deals are struck by city governments (squandering tax money without discussion in the community) to bring in Walmarts into neighbourhoods. In other words, the corporate giant is subsidized by the tax dollars of the people who are getting the cheaper goods at Walmarts! The Walmart phenomenon also creates the frightening paradox, as one commentator calls it, of low-income, conscious, intelligent youth who denounce this kind of deal, but once Walmart opens, they may well be forced to work there (and most probably not be able to afford to shop there) – they need jobs, and Wal-Mart, as the largest employer in the US with 1.4 million workers, ‘always has a lot of low-wage, non-unionized,jobs with no benefits, not to mention, unfair racist, sexist employment practices.’
All choices are made within constraints. Once corporate giants like Walmart take off, with the full backing of the state machinery, those constraints become pretty much non-negotiable.
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Thanks, Nivedita. Cogent and well argued.
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I appreciate your detailed reply. And I do see the concern. But in India we have always had deep concerns about any sort of FDI.
I am not sure if you are old enough – but if not you can ask your parents about the time when people had to ‘book’ a scooter and wait 10 years in line to get a scooter from Bajaj. Not until the Kinetic-Honda came did India have a decent alternative to the great old Bajaj scooter. Then we had Hero-Honda and TVS-Suzuki and whatnot. And what happened to Bajaj? Did it crumble under the foreign competition – or was it forced to reinvent itself and offer better products?
My point is – how well has the existing system served us? We have had 60+ years to make it efficient. Who would rather see 50% of food and grains go waste in storage and transport (and lead to food inflation) than have an efficient supply chain? Walmart has mastered the supply chain – they make sure its the most efficient because it helps achieve lower prices – which means more people shopping and better profit for Walmart. So its in their interest to ensure the best supply chain they can get.
The opposition to Walmart in the US is mainly bcos of 3 things –
1. WMT is not unionized – so the unions oppose it.
2. WMT is seen as a importer of cheap goods from China, India, Taiwan etc. thus reducing the jobs in the US. (I think this is unfair as ALL retailers do it).
3. WMT is seen as an employer who gives minimum wages to employees.
In the existing Indian retail sector –
1. Is not unionized .. so no points there.
2. Cheap goods from China are already at my local store too.
3. My local kiranawala takes every advantage of his employees that he can. Does he offer any better benefits? Vacation? Healthcare? Insurance? Do you think he offers clean un-adulterated stuff to his customers at the lowest price without price-gouging? Do you know any poor garment / wholesale merchant / shopkeeper?
I think we do need a bit of organized and efficient retail. I have personally seen the existing ineffective system – grains left to rot instead of selling at a cheaper rate, notebooks meant for free distribution sold off in the black market .. and tons of soiled vegetables thrown in the garbage every morning in the local mandi.
And if – as Shankar Gopalkrishnan says – the organized retail sector does not offer lower prices – then its even better right – since people will not shop there.
sd
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Capitalist desi,
Walmart is certainly not going to get rid of the problems you highlight!How can Walmart prevent notebooks from being sold in the black market? We already have organised retail – big bazaar, Spencers, Subhiksha, Star Bazaar, to name a few. They will probably benefit from foreign investment, but they will lose their controlling stake. I think it is too optimistic to expect that foreign retailers with 51 % stake will solve our cold chain problems! And corporate buying leads to cartelisation, as well as muscle power that dictates what should be grown, which varieties should be grown…. The whole proposal needs a careful rethink, and more provisions to ensure it supports local manufacturers rather than Chinese and South american ones. See what outsourcing has done to the American economy.
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Nivi extremely well put…as always…i am glad that inspite of the lust for bad capitalism that successive governments keep falling prey to at heart we still remain a communist nation.
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As long as the definition of ‘they’ include only union honchos, opportunistic politicians and avaricious lawyers. The people love Walmart, and they have voted with their wallets:
http://www.washingtoncitypaper.com/blogs/housingcomplex/2011/02/16/how-walmart-won-ward-six/
http://www.thedailybeast.com/blogs-and-stories/2009-05-16/does-walmart-make-you-skinny/full/
Nivedita Menon says: ‘ no data from anywhere else in the world will make them even blink before they smoothly slide..’ and then go on to use data from developing countries to ‘prove’ that Walmart doesn’t actually reduce prices in the US! Irony, anybody? The fact is that Walmart reduces prices, not just for people who shop at Walmart! : http://www.nber.org/papers/w11809 The savings often ends up as a significant percentage for low income families.
If Walmart jobs are so horrible, why people throng to get one?
You begin shopping at the Wal-Mart because the prices are cheaper and you can still walk through the vibrant downtown when you like. But with everyone buying things at Wal-Mart, the downtown stores can no longer afford to stay open and the center of your city turns into an empty husk. You’d prefer to have the vibrant downtown to the Wal-Mart, but nobody ever gave you that choice.
The very first sentence contradicts the entire premise. You decided to shop at Walmart because the prices were cheaper! You had that choice and you exercised it! The disappearing downtown is a consequence of your choice, bad but a consequence neverthless. Obviously, cheaper prices outweighed your need to walk to the vibrant downtown.
By the way, the ‘Walmart eventually wipes out small neighbourhood shops, and eventually people are left with no choice but to shop there’ story is not all that it cracked up to be: http://www.cato.org/pubs/regulation/regv31n1/v31n1-1.pdf
All choices are made within constraints. Once corporate giants like Walmart take off, with the full backing of the state machinery, those constraints become pretty much non-negotiable
There is nothing non-negotiable about shopping at Walmart. The trouble is that intellectuals like Ms Menon assume that consumers are dumb-asses who don’t know what they do. The observable fact is that consumers are very savvy, often taking established businesses who thought they knew their markets well by surprise. Ask Nokia.
Walmart has a net positive effect on the US economy. At the very least, it doesn’t have any observable negative impact – see the Cato paper. Anti-Walmartism is just a sort of cult now in America. More because it is a symbol of the Evil Corporation than anything else.
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Murali,
a) ‘The people love Walmart, and they have voted with their wallets’
The two links you give us make the routine argument made in support of Walmart, that Whole Foods type super markets are more expensive, and Walmart gives jobs. Yes, that’s what America is, after two decades of Reaganomics that has left devastated local economies, rampant monopolism as represented by Walmart, and a crippling recession. In the US, Whole Foods and Trader Joes etc are of course the only alternative, and once Walmart has its way in India, can Whole Foods be far behind, another corporation to give us yuppified over-priced stuff we (and poorer people) buy routinely from the subziwali on the pavement and the kirana shop around the corner? So what’s the idea – to first exterminate these, and then bring back what they gave us as la-di-da “farmers’ markets” and Whole Foods-type packaged naturalness? Every local weekly haat or bazaar that many cities and towns have is already a “farmers’ market”.
The whole world is not already the US (and people willing, it will never be) – please spare us the Whole Foods analogies.
b) “The fact is that Walmart reduces prices, not just for people who shop at Walmart”
This relentless insistence the Walmart prices are low is both false and misleading.
It is false for countries other than the US (and even for the US). Shankar’s data shows that prices in supermarkets are generally higher than from existing retailers – in Thailand, they are estimated to be 10% higher, in Argentina, data showed consistently higher prices for fruits and vegetables in supermarkets; in 2000, in Mexican supermarkets, prices of lemons, tomatoes and oranges were significantly higher than in traditional markets, while in all other fruits and vegetables they were identical or slightly higher; in Vietnam, in 2002, it was found that prices in supermarkets across all categories were around 10% higher. And in the US, supermarkets raised tomato prices by 46% between 1994 and 2004 while real prices paid to producers fell by 25%.
It is intentionally misleading because those prices are kept low by a strategy conceded by Walmart’s most fanatical supporters. For instance, one of the pro-Walmart economists you quote, Art Carden says (and I quote him):
“One robust criticism remains: Walmart has sometimes used the State to redistribute resources to itself and to cripple its competitors. Walmart is aggressive about seeking subsidies, such as acquiring properties through eminent domain, from governments eager to “attract new jobs” and new tax revenue, as critical groups like Good Jobs First, WalMartWatch.com, and WakeUpWalMart.com point out. These subsidies distort patterns of economic activity and sometimes can have the perverse effect of taxing one firm to subsidize a competitor. The problem is compounded further by the alleged need for more subsidies to redevelop areas blighted in Walmart’s wake. ”
In other words, Walmart is assisted gently by the power of the state to cripple its competition, that’s how it keeps prices low. Art Carden says this, who has written reams of stuff in praise of Walmart, including the stunning argument that a Walmart in poor neighbourhoods reduces obesity by making cheap healthy food available!
As another analyst points out, Walmart keeps prices low by forcing suppliers to cut costs.”To survive in the face of its pricing demands, makers of everything from bras to bicycles to blue jeans have had to lay off employees and close U.S. plants in favor of outsourcing products from overseas… “People ask, ‘How can it be bad for things to come into the U.S. cheaply? How can it be bad to have a bargain at Wal-Mart?’ But you can’t buy anything if you’re not employed. We are shopping ourselves out of jobs.”
And I guess if Walmart is already in a place where labour cant get any cheaper (Thailand, India, Vietnam), that cost advantage is lost, hm?
And by the way, the link you give to prove that Walmart offers lower prices makes the argument that “consumers often benefit from increased competition in differentiated product settings”, assuming that Walmart co-exists with other retail outlets, and the competition between them leads to lower prices. But Walmart functions by eventually destroying all alternative retail outlets to itself. How can the concentration of power in the hands of a few companies possibly lead to lower prices? Isn’t this a simple economic fact known to all votaries of capitalism? Ask Thailand, Vietnam, Argentina! (And indeed, the US).
c) Ah, but you refute the fact that “Walmart eventually wipes out small neighbourhood shops”, citing a study that you have not read yourself, it seems.
The authors state, and I quote them:
“The main argument in our paper was that the process of creative destruction unleashed by Wal-Mart reaches far beyond the retail component of the small business sector. The money customers save shopping at Wal-Mart is spent on other items, creating demands for other small entrepreneurs to fill (like internet retailers)…The resources flowing out of small retail find other productive uses. We point to many downtown retail shops closing and in their places seeing new, small non-retail business such as consulting firms, lawyer offices, and coffee shops. There is a stirring of the pot, and a reallocation of resources. Clearly some mom and pop businesses fail, while others are born.”
So retail shops close, and non-retail shops are born, that is their argument. Non-retail shops offer no competition to Walmart. And look at what replaces shops selling daily necessities – coffee shops, consulting firms, lawyers’ offices! Shops that once offered daily necessities to a lower end of the economic spectrum are replaced by businesses catering to new yuppies (most of whom must have lost their jobs by now, and I wonder how long those non-retail businesses lasted).
Yes, the likes of us do believe the Corporation to be Evil, and the larger it is, the more Evil (Wal-Mart is not just the world’s largest retailer. It’s the world’s largest company – bigger than ExxonMobil, General Motors, and General Electric.).But the likes of you hand over your reasoning power to the Good Corporation. Much of what I have said here is based on the material YOU provided, after all, you just dont seem to be able to assimilate what the stuff is actually saying, because your imagination has been utterly colonized.
Cheers, Murali, happy shoppin’!
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It is indeed true that the large “low price” retailers do sell goods at a higher price. I have witnessed it in Indonesia where Carrefour and a local “giant” Hypermart reigns the retail industry in the big cities. They trick the customers by displaying a price that is crossed out and showing to offer a discount. In fact I got to understand the real difference when I visited Pasar Senen, the largest vegetable market in Jakarta (of course not an Evil Corp). The difference in prices was overwhelming. Still, people don’t care. They drive in to the pavement parking of the big supermarkets and enjoy the “low price” shopping.
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My question is: will WalMart open any of its magnum stores in rural belts, which are actually struck by poverty and food shortage or inefficient PDS system? Never mind us, sitting in Delhi or Mumbai, we will always get our food, no matter how much the food price inflation, no matter how much the wastage! We can take care of ourselves – WalMart or no WalMart we’ll get our food, fashion and fodder. The concern of all well meaning citizens should be to reach food items to areas which are crying out for our attention and help. Ask those WalMartwallas and their brethren to open stores there and offer products “cheap”
i.e. prices within the reach of locals there and see what they do ….
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Actually Nilanjana, I learnt from Shekhar Swamy’s piece in Business Line that the foreign retailer is in fact restricted by government policy to opening stores in large cities! Swamy says: “This is no problem as any foreign company will only start in the big cities. The real issue is on the sourcing side. The policy permits them to purchase locally all agricultural produce, including fruits and vegetables, pulses, fresh poultry, fishery and meat products, and sell them unbranded in their stores. They can virtually corner the trade in the rural areas, as they scale up…”
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FDI should come to India because most of our small retailers indulge in unfair trade practices and are dishonest. The wholesalers (specially the agricultural commodity traders) do choke the poor farmers by forcing them to sell at dirt cheap prices and reap most of the profit from the end buyer of farm produce. The unorganised retailers exploit their employees who dont have a choice. The whole retail trade is so unscrupulous and cause loss of tax revenue to government as receipts are never given. Nothing drastic would happen to the economy if the foreigners are also allowed to compete in the huge Indian market.
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No, nothing drastic would happen immediately – everything would sipmly get worse. Certainly the existing system is brutal and exploitative. BUt the new one is too. In what sense do you imagine that corporate retailers are less cruel, less exploitative and more friendly than existing traders? Do you see them as more scrupulous? I wonder why.
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I think we also need to connect the resistance against Walmart and other similar large retail outlets, whether Indian or foreign with the increasing withdrawal of the state from the PDS and the whole cash transfer drama going on there. It seems to be as though both are integrally related to each other.
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Murali says “If Walmart jobs are so horrible, why people throng to get one?”
simple answer mate – nothing better available
also if the low prices lead to such great savings then how come household debt in US is so high…
An economy based solely on low wage jobs and low prices leads to Miley Cyrus singing rebellion
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CapitalistDesi – a) “I am not sure if you are old enough…”
Before you patronize people about their age, it might be a good idea to check out basic info available on the kafila ‘about’ list. I’ve been around a long time, long enough to have heard every argument you make as if it is new minted, a million times, from people of every age. Though most vociferously from young privileged students, actually.
b) “Who would rather see 50% of food and grains go waste in storage and transport (and lead to food inflation) than have an efficient supply chain”
Food inflation is due to wastage in storage and transport? And it has nothing to do with storing foodgrains to keep prices high, dismantling PDS (as Philip Vinod Peacock points out in his comment above), and a whole host of other factors that have to do with profits rather than the needs of those who actually labour to produce the stuff we eat. Sri Lankan journalist Varindra Tarzie Vittachi in his brilliantly satirical analysis of The Brown Sahib mentality, mentions the irony of Morarji Desai’s visit to Sri Lanka as India’s PM, proudly claiming that India had ‘surplus’ food grain production in a period with a marked number of starvation deaths. Of course, food was ‘surplus’ because people couldn’t afford to buy it, not because everybody had eaten their fill. The thing about the discipline called economics is that its primary function is to obscure troubling thoughts such as these with a barrage of econometric models that somehow always, always prove that the capitalist is always right.
And just by the way, Shankar’s research shows that the international food industry – controlled by the same chains currently advertised as sources for FDI – wastes almost half of the food it procures
c) The three reasons you offer for the opposition to Walmart are not the only ones – the key reason is the devastation of local small businesses, which I address in my response to Murali and Shankar does too in his post.
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Nivedita –
1. I did not mean to patronize. It was a simple statement that if you are too young to know of the time when people used be forced to wait for a scooter for 10 years then you can ask someone about it. It is regretful if a good debate is misunderstood so easily.
2.I do not see how Walmart will devastate local small businesses but Reliance / Pantaloons / Big Bazaar / Bharti / Other Malls do not.
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For the last time – YOUR POINT 2 HAS BEEN ALREADY COVERED BY SHANKAR”S POST. I beg you to read it if you really want an answer. But I’ll quote it again here, just to be on the safe side. (Please read other comments and responses to them before coming in again with something already asked and answered).
But first, nobody is making a case for Big Bazar, Reliance, malls etc. The likes of us had objections to those too. The real question is, why have they not been able to be successful enough to do what we feared? Shankar says: “The small presence of corporate retailers in India’s markets today is a reflection of the fact that in themselves, corporate retailers offer nothing that allows them to out-compete the existing system. This is why the entry of FDI has been shown to be the single determining factor that permits large-scale expansion of corporate retail in developing countries.
The large quantities of money that FDI provides permit retailers to displace existing suppliers and establish monopolies or oligopolies when purchasing produce; to absorb losses and hence fix lower prices until the competition is wiped out, whereupon prices will be raised (i.e. predatory pricing); and to pressurise governments into bending regulations and subsidising their activities (the latter is already visible among existing corporate retailers).
The simple reality is that, if corporate retailers were simply going to grow alongside the existing system without displacing anyone and purely because of their better results, they would have done so already to a great extent.”
So why haven’t they? The fact is they cant without massive backing from the state, which is what they are now being offered.
Really, all these votaries of the free market – this is what you defend – gigantic monopolies supported by states?
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@capitalist desi, dude its high time for you to make a respectable exit out of this debate, u had made a proper fool of your yourself by now.
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I think people who all are arguing here have already taken positions and defending them with great verve. The truth is, the present PDS has failed us and present policies do not favor farmers but middlemen. Secondly, local kirana shops provide substandard products.
I remember these kinds of debates happening when color television was introduced and even when economic reforms were introduced by MMS/ Narsimha Rao govt.
I may not be so well versed in debating financial aspects but I do understand that we need to change the way we function. Opposing for the sake of it will hamper our progress. For me, if this benefits farmers in anyway, I would go for it. The farmer is the most neglected lot in India and these 60+ yrs haven’t done much for him. They need respite from exploiters and that should be our main concern.
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Madhvi, it seems you are the one who has taken a position despite admitting frankly that you are not “well versed in debating financial aspects”. In that case, why not try to learn something?
Take a look at an earlier post on kafila on this belief of yours that farmers will benefit, a belief assiduously fostered by the government and corporate retailers themselves. Do read the whole post, in which most of these kinds of rehashed arguments in favour of corporate retailing have been exposed on the basis of extensive data. My post here is only a companion piece to that.
Here’s the beginning of the section you should read, regarding supposed Benefits to Farmers:
“Most purchase for corporate retailers occurs through contract farming. This actually has negative impacts on most farmers.
All studies of contract farming and corporate food retail show that small and marginal farmers are unable to access the supply chain (15)
More than 90% of India’s rural population has less than 2 hectares of land and 79% are either landless or own less than 1 hectare. Practically all of these people will be excluded from the corporate supply chain…” (Read the entire post here).
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The fact is that the alternative to Walmarts in the US are again mini Walmarts such as Kroger, Target, K-Mart, Acme, Whole Foods, Giant etc. Organized retail is the predominant form of retail in the US. The reason organized, scale efficient retail works in the US is because it encompasses the best in technology, logistics, and management. The traditional mom-and-pop stores went out of business as a response to the technology and management innovations that surfaced in last few decades and the resulting structural change was indeed inevitable. The author clearly mistakes the specified incidents of opposition to Walmart in the US as equivalent to opposition for organized retail industry as a whole. If the author is not mistaken, she should be supportive of Kroger, Giant, Whole Foods etc. But the truth is that all others employ the same management practices as Walmart, only that they are not as good as Walmart.
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“The traditional mom-and-pop stores went out of business as a response to the technology and management innovations that surfaced in last few decades and the resulting structural change was indeed inevitable.” I am not sure about this. One does not know structural conditions in the US, but in India, the “advantages” of corproate retailers have far less to do with “technology and management innovations” than they do with the fact that they can escape regulations (unlike small retailers, who face constant extortion, demolitions, eviction and sealing drives, etc.) and have access to cheap credit (again sharply unlike small retailers). There is no “level playing field” between corporate retailers and small retailers in India, certainly, and there probably was never one in the US either. Further, the “technology and managemetn innovations” you refer to primarily are about supply chain management, which is a fancy term for being able to transfer risks from the retailer to others – either through imposing them on the producer (as in contract farming with “quality” standards, “quality” here meaning satisfying the corporate’s requirements for long durabiilty etc.) or through speculative activity and price hunting, where one keeps hunting for other producers and controls supply in order to get higher revenues. None of this is directly related to any social benefit.
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ShankarG: Where did you get that definition of supply chain management? Pretty creative! Yes, whatever I have said was about US and not India. Why do you think there is no level playing field? At least in the US, if small chain retailers like Kroger or Whole Foods are able to survive despite Walmart, it is due to product differentiation, store size, location, level of customer service etc. Each caters to different customers, tastes, and preferences. And then you also have tiny convenience stores like Wawa, 7-Eleven, or gasoline stations that cash in on convenience and quick check-out factors. Yes, some mom-and-pop stores are able to survive too by differentiating themselves further with localized offerings or exceptional quality where customers are WTP premium prices. Don’t you see how people and the enterprising classes can adapt and sail through structural changes? Social benefit is maximized when both the producers, sellers, and consumers can maximize each of their surpluses. In the American system that is the case. Firms compete to pay the producers best price possible, and offer a combination of best prices and quality of service possible to win the consumers. Isn’t any of these related to social benefit?
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I very much agree with Sridhar, on the Porter’s market strategies matrix, you believe all retailers would be cost leaders and no body would occupy space of differentiators. It is a well established fact that there are no narrow cost leader, so any mom and pop store competing on cost would fail, but competing on differentiation would succeed. Can large retailers do differentiation, they never have been able to do so, even Porter argument about getting stuck in the middle is precisely the same. Mr. Shankar’s argument is valid but escapes the differentiation argument completely.
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ShankarG: FDI in retail or not, your definition of supply chain management is pretty poor and off the mark. As far as my knowledge goes, supply chain management has resulted in better practices, in procurement, manufacturing, logistics and sales which reduces the total cost to the powerhouse in supply chain – in this case the retailer. Supply chain mgmt. does not include just reducing supply cost, it also deals in reducing inventory and transportation costs and increasing revenues by reducing wastage and increasing availability of products in right quantity at the right time and at the right place.
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I think your definitions of supply chain management and mine can coexist perfectly well. What you are describing is the textbook language of describing supply chain management – what I said, in an admittedly abstruse way, was the intention of such management.
Look again at the last part of your sentence: “increasing availability of products in right quantity at the right time and at the right place.” The right time and the right place for whom? For maximisation of the retailer’s revenues, obviously. But actual production does not match “the right time and the right place” – the most obvious example is food, which is produced as per agricultural seasons, not as per “the right time and the right place” for retailers. So then who absorbs the risk of mismatches between production and consumption? The purpose of supply chain management, as you yourself have just said, is to match time and place for the retailer – and therefore to transfer the risk of failing to do so on to someone else. There are very visible examples of what this means: supermarkets across the world are accused of tarnsferring discounts, product promotions, and even initial processing costs on to producers (look at the literature on South Africa, the US, the UK, Latin America, East Asia, etc. if you don’t believe me). A really classical example is Pepsi’s behaviour in Punjab, when contracts with potato farmers for production of potatoes for chips were simply defaulted on when there was a glut in the market – and the farmers were effectively powerless to do anything about it. What is this except transfer of risk?
As for this being the best way to meet “consumers’ needs”, I’m not so sure. There is a reason that nutritious but more difficult to store / standardise crops are being wiped out by agribusiness the world over. Why? Because storage and processing of such crops (and thereofre “supply chain management” in your definition) is more difficult. The result is that many forms of crops that are more nutritious, with health benefits, and the sheer diversity of food crops and food types that they bring with them, are disappearing. Is this consumer “demand”? How can it be, when they are never given the option of buying them? The PDS in India is of course having a similar effect, but for very different reasons.
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Thanks Nivedita for your comprehensive illustration. I see FDI in retail through another Prism. If Capitalism is to sustain it would have to seek new avenues for investement and given the anemic economic condition in the West ( Thanks to Neoliberalism!) they turn to India, China, and Brazil (So-called emerging nations) with great vigour. FDI in retail is another form of primitive accumulation that will displace millions of people from their livelihood (as was proclaimed by Marx 150 years ago!) and conscript them into reserve army of labour, and thereby keep the wage low. It’s a history-suggested transition that every civilization has to undergo. FDI in retail will not do any good to any common person – otherwise it would not have been sought by the corporate honcho – but it will certainly invigorate morbid Capitalism by sparing it from the crisis of Overproduction – the fundemental flaw in Capitalism which was earlier negotiated – in the 70s and 80s – by means for Financialization.
By the way, to people who are grumbling about ‘low-quality’ Kirana products, I have a question: Why are you at all buying from them? If your answer is that you’re left with no other option I would argue it also applies to people who are opposed to Walmart but still shopping there!!!!!
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Sabya
i fully agree on your thoughts of capitalism trying to find next investment opportunity for survival.
its a great turning point for capitalism as the known growth area are all dried up. which will be major new avenues other than retail in india and world at large???
welcome your thoughts.
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dear friends
benefits of chain stores are very good.
big air conditioned lovely buying place.
will give good looking packed food.
will eliminate inefficiency in supply chain–
all small traders,
all small truckers,
poor labourers
and small farmers
which for 40% below poverty line population will be forced to become competitive hence will reduce in number and india’s largest poverty problem will be solved.(eliminated).
why you need wall mart even for this????
we can built missiles/bhahmos have large co like infosys where so few countries suceeded -hi tech software. what is there in suppluy chain???
what you need to do is change local laws.
apmc act and inter state laws.
since govt is going to gst- goods and servises tax next april which will help national level operators by moving goods thru golden quadrilteral.
allow fdi if you want to after 5years of changing law — apmc act- and gst implementation .
allow them to open stores only in city below 5 lakh population and which are minimum 50 kms away from large city limits..
india is large country.
we will mange cities our selves.
let us see what happens.
today also they can open cold chains,operate packing,, sourcing etc, only they have to sell to reliance and big bazar which is not acceptable to them.
just go and open a bank in usa-
-open a store in middle east (you have to have local partener even for kirana shop with majority stack with him)l
and after all you will loose your job but it will be too late to reverse the processs and you will not be able to spend this time on net !!!!!!!!!!!!!!
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Yes, that’s what America is, after two decades of Reaganomics that has left devastated local economies, rampant monopolism as represented by Walmart, and a crippling recession.
Ronald Reagan is not the messiah (or villain, depending on one’s political handedness) of small government republicanism or deregulation as is made out to be in literature and popular imagination. Yes, some de-regulation did happen and for the first time in history, the regulation statute book shed a few pages. Be that as it may, it is too uncharitable to lay the blame for America’s descent into a hyper-regulating nanny state on his doorstep.
The fear of monopolies is a fixture of political life. Not just the Left, but the Right too is afflicted by it. So much so that the laws themselves reflect this irrational fear. As per different provisions of the statute book if:
a) you charge more than your competition and you command 8% or more of the market share, you are a monopoly
b) you charge less than your competition, you are guilty of monopolist practices irrespective of market share
c) you charge the same as your competition, you are indulging collusion, a monopolistic practice
No matter what Walmart does, it is a monopoly as per the law, as its market share is around 11.3% (2009)
It is only the lack of resources that is preventing the Justice department from prosecuting every business in the land.
The USSA of today is so over legislated that you can’t spend a single day without committing some felony or misdemeanour . That is, if you are not running any business. If you are running one, you are guilty by default.
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