Be afraid of Wal-mart.

I walked into a Spencers store this weekend resolute about buying exactly three things smoked turkey breast, freshly baked bread and if they had it, peach flavoured iced tea. The smiling uniformed woman at the entrance said Namaste, sir and handed me one of their orange shopping bags. That proved to be my undoing. By the time Id wandered through the store and found my bread and cold cuts, I realised I was not even going to make the 10 items or less Express line. As I left the store I was wondering why I had succumbed to the buy one and get a smaller one free sale in olive oil given that I barely had need for one, let alone two. Have shopping cart, will shop When and if FDI in multi-brand retail really comes to India in full force get ready for a lot more needlessly full shopping carts. The BJP might rail against FDI because it thinks international retail will source internationally, leaving local manufacturers out in the cold and Mamata might rant against it because she feels for the small shopkeeper, but for the apolitical aam aadmi urban shopper, the biggest danger of the big box store is how it changes our patterns of consumption. Once we were used to going to the local kirana store, with a little list and some boy would climb rickety ladders and get us what we needed. You almost didnt want to ask for too much because you didnt want to weigh him down. Even now my mother shops by phone and the vegetables she ordered, and exactly what she ordered, shows up at home. There is no scope for that impulse buy of over-priced broccoli or shiny red bell peppers. But a supermarket is different writes Sriram Natrajan in Outlook magazine, looking at the 711s and Tescos that dot Thailand after it relaxed FDI rules. Its sheer architecture, identical whether in Tampa or Taipei, offering the pleasure of driving a shopping cart through rows of goodies, is not merely intended to organise and facilitate, but to induce excess.

This pleasure of driving a shopping cart cannot be underestimated. The nostalgist in us still craves the old market where the fishmonger knows your name, and Mr. Butterman does not just sell butter but also dispenses unsolicited real estate advice. But pushing that cart gives us a feeling of being masters of our own destiny, of efficiency, of choosing the cereal we want, and changing our mind about it at the last minute. We are in charge and we have choices. Of apples and apples

Walmart knew her sweet spot exactly two for one specials, 25% discounts, buying cheap and buying in bulk. It got her to spend more by paradoxically appealing to her sense of thrift. It makes consumption virtuous. AFP. AFP

But is that choice or an illusion of choice? In his book Stuffed and Starved, Raj Patel explains that what we think of as choices are really the choices of giant food production companies. In America, in the beating heartland of choice, you can go to a supermarket and see neat pyramids of all kinds of apples ruby red, dark crimson, blushing pink, pale green. Patel says western supermarkets have about half a dozen varieties of apples but its always the same half dozen. We never see any others because only the kinds that can be waxed and shined to perfection, that can withstand over a thousand miles of travel from orchard to supermarket aisle make it to the big

store. The choice between Coke and Pepsi is a pop freedom its choice lite, writes Patel. The variety we see is often the same old stock, just rotated around to look fresh. As for being in charge, when the first big supermarkets came up they quickly figured out they needed to stock common essentials like eggs and milk way in the back, as far away from the entrance as possible. The idea is to catch you when you run in to get that carton of milk you forgot. By the time youve walked through the whole market to find that milk, chances are you will have a whole shopping basket filled with many other things you forgot or were on sale. As David Derbyshire explains in The Telegraph, the impulse buy is not impulsive at all. Its carefully programmed. The most profitable impulse buys and special offers are placed on aisle ends and shops are designed to ensure you pass as many ends as possible because manufacturers pay extra for end cap placement. That baking bread smell Nothing is accidental. That smell of fresh bread baking at my Spencers is meant to lure me along the aisles of things I dont really need. Like those mint wafers I picked up. Some supermarkets even pump out the smell of freshly baked bread to give you that homey feeling even when no bread is being baked at that moment. That sample station where you can try a new cappuccino in a little paper cup isnt just selling you a new coffee flavour. Its trying to slow you down so you buy the cookies behind it. The pharmacy within the store is a big convenience except it means you have more time to kill as you wait for your prescription to be filled. Economists will get to judge whether a Walmart really radiates a circle of death for small businesses around it as a new study points out. Or whether Walmart in India will be quite the same behemoth as it is in small-town America or will India tame it. But the retail giants eyeing Indias great middle class are all betting on a population that is primed for consumption, especially if its disguised as a choice wrapped up in a bargain. It is the ultimate shedding of our socialist past. You have been holding out on me

I remember years ago my friends mother visiting him in America from India. Towards the end of the trip, he finally took her to Walmart. Her eyes popped open. This is what you have been holding out on me, she exclaimed, grabbed a cart and proceeded to do all her India-shopping there. At the end of that little shopping expedition shed spent more in that one store than the rest of her trip because it was all such a good deal. Some of those gifts she got are still sitting in a box somewhere in their house because she ran out of people to give them to. But they were still so cheap. The woman who bargained ruthlessly with the spinach-lady in her market in Kolkata over a bunch of cilantro completely lost control in the neatly-ordered aisles of excess. Walmart knew her sweet spot exactly two for one specials, 25% discounts, buying cheap and buying in bulk. It got her to spend more by paradoxically appealing to her sense of thrift. It makes consumption virtuous. I dont how the kirana owner will deal with FDI but I am certainly nervous about how I, and the rest of our bargain-hungry middle class, will survive it.

COMMENTS :
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Iyer a day ago

I worked in Retail for a few years. I feel that the problem with retail lies with the top managers in the Indian companies. They all felt they knew what retail was and felt they could dictate terms to the Indian housewife. Any one of them could have written the above article - I've seen strategy notes and marketing plans full of such stories. All Indian organised retailers like Spencer Nilgiri More Reliance etc are modelled for male shoppers. Whereas female shoppers (except a small percentage of 'modern' ones) prefer the local store. Hence organised retail in India has failed

because of top management hubris. I don't think the Walmarts will be any different. Because they will come in with the attitude that the Indian organised guys did not implement it right whereas it is our model we know how to implement it. Yes it might me your model Walmart and you might know best how to implement it, but will the housewife buy from you?
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benjamin a day ago parent

never thought this way but I think you are right. in my house all the ladies prefer the local store and only i go to the supermarket because i find it easy to shop in the supermarket. i think the ladies go to the local kiranawallas because better personal experience there. out of around monthly 5000 rupees we might spend 4500 in kirana and myself 500 in nilgiri. if walmart comes i might shop in their store like the author says and buy more things, but not sure about my wife and mother sister etc.

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Sandip Roy a day ago parent

Very interesting, Iyer. I wonder if anyone has done a study of gender breakdown of Spencer's etc.

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Iyer a day ago parent

Not sure, Roy. I haven't come across any such study myself. Wouldn't matter though I feel. It might show a high number of female shopper numbers but the key metric will be how much she spends in the supermarket vs the amount she spends in the kirana. The supermarket share will be small in the overall scheme of things (evidence how they've not made much of a dent in the overall market despite being around for long enough). She might go to the supermarket for specific items - like say chicken - but buy her daal chawal masala tel from the kirana. Whereas the guy shopper would do all his spending in any single supermarket - he would hate visiting many shops.

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I love Paco a day ago

Mr. Roy, your anecdotes and examples of retail strategy seem on the surface to make your argument powerful. However, and that is the beauty of the Indian market, at an overall level this does not work. The Indian shopper (your friend's mother is hardly the typical example many will argue) is notorious for spotting a true bargain and for seeing through the so-called buy-more

schemes of our modern retailers. If at all anyone has been able to master her, it is the local kirana. Notice how your Spencer has degraded over the past decade from the poster boys of organised Indian retail to a stinkhole - once the nomenclature to describe a kirana. Yes I still go to a Spencer store once in a while with a list of three things, but I come back with none because invariably they don't have stock of what I want. The local kirana nearby does though. I am therefore of the humble opinion that the attitude that governs your opinion and article is exactly the same smart-ass 'I-know-retail-I-read-Paco-Underhill' attitude that has been the downfall of the Indian version of Organised retail, and hopefully Walmart will enter with a different attitude where 1) the consumer is queen and not someone who's wallet is unlimited and 2) learn from the kirana. One might argue that Indian Organised retail failed to do it right and Walmart will not fail in how they apply those strategies. But I doubt it. Let's give some credit to the doyens of Indian retail who have tried for 16 years now and failed - they were not fools. I think the Indian consumer is unique and no business model anywhere in the world barring the kirana model can be successful in winning her over. Walmart - or Reliance - or whoever, has to find a means of replicating and scaling that model.
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Cherishma Shah 6 hours ago

It can't be called threat but its only a strategy, for appealing something great. All the traditional shop will simultaneously will be there present and would die not with competition.
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Dhananjay Joshi a day ago

I also agree , Our people are deeply deeply rooted in middle class ethos, May be initially few round to super market will make us buy more, but gradually (faster then any other country consumer ) will learn to spot the loss leader ( and our need for it ). I my self was amazed by mall whey they were new , But now I know how to spot the loss leader, and buy from Mall,local Kirana wala , main city market, and other places to optimize my resources depending on price point and my need In fact it happen all the time , In Mumbai people go to malls not to buy but to stay in AC all day :).
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gs.sharma a day ago

Article pinpoints certain psychological traps of shopping in malls. Very true indeed. It also vaguely touches the forcing the public to buy what they want to

sell - not what the customer really wants. This is where the real danger starts. To understand this one should try a few shops in the city for the same type of product to know how many brands are available. When a supermarket opened near my house, I could see 4 to 6 brands of the same product. This made choosing very easy and try different companies products. I found that some of the products that are made by not so famous companies in our area is actually very good and cheap too compared to the more common and famous brands. Unfortunately these products where not available after a few months, not because they don't make it, but because the supermarket management found that the profit margin is lower while the shelf life is little longer than the common famous brands. Again I was forced to buy the same products which every one buys or sells. Two things happen here : The customer don't even get to know other companies product. (2) He is forced to buy what the supermarket buys at cutthroat discounts + credit and equally force it down the customers throat. If the companies refuse to offer the huge discount these supermarkets demands, their products will not see the light of the day even if the products are good. In short - They control the market and sales. The customer by patronizing such super markets and the super markets together form the death nail for such promising companies. The customer blissfully remains unaware of the outcome. In fact, there are many chances that the excecutives of many of the small & medium companies may loose their jobs due to lower sales figures. It is not just the small traders that stand to suffer but small companies too who may make good products are reasonable price. 60% of the price of commercial products is due to the marketing - tv ads, paper ads, huge discounts and whatnot. One can only imagine

if any small company tries to make good product and cannot spend that 60% for marketing activities. Who stands to loose - customers. So now one can count on actually who are affected by these large scale operations. The small operators in fact function as vendor-trainers for these large companies. These large companies pay huge salary almost triple of the industry standards, but may require experienced hands. The small traders on the hand will never be able to pay that kind salary. Many of the aspirants starts with these small traders, get the required training of handling the customers and product knowledge and switch to the large companies. The small traders ultimately looses the time, money and effort spend to get a reliable worker. In 3 months to 6 months time he has to find another worker again. This is not a good thing for an overall growth of the people. The result is tumorous growth, which is far more harmful to the economy and public spirit. If these persons loose their jobs where will they turn to next ? Another area touched are the farmers. Many claim that the farmers stands to benefit due to sharing to profits. Sharing of profits ? my foot. How can they do that? If it was possible why on earth is that not implemented now? The reality is mindblowing. The farming land which was costly harding 3 lakhs for 100 cents of land have suddenly become 45 lakhs to even 1 crore in the last couple of years. Why? Discreet enquiries have revealed that all the farming land was purchased by Big companies. Why do these companies buy farming lands ? Where did the farmers go after selling their lands? What are these companies proposing to do with these lands?

The result is anyone can imagine with the bleakest of intelligence. These big companies control the lands, produce and the market. Who knows what they shall feed the public? Genetically engineered vegetable and produce? Yes very much the possibility. They will claim, advertise and even the govt comprising of ministers who have their own business interests (never directly so that any one could implicate them) shall even create laws (like iodine salt we are forced to eat) that these products are far better than the natural produces of the land. Govt also sanctioned FDI in medical sector. The outcome of testing medicines on human beings without proper sanction or validity are trickling out. The industry is already a multi-billion one. (dont waste time counting the zeros just look for news of foreign corporations buying part-share of Indian medicos for 4 to 5 figures crores. Recently a Tv serial had brought to light a small glimpse of what happens in that area. Thus the socio-economic implications of such large scale operations and allowing of FDI is not that simple to comprehend and surely do have widespread ramifications. It is not just a matter of few crores of foreign currency coming to India and a few jobs being created at higher pay scale or customers getting a few items are cheaper rate (thought these are welcome changes). These changes are never properly addressed by the ruling party or by other political parties.
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guest a day ago

nice article, gives a new viewpoint of the impact of multibrand retailing in india
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bappi007 12 hours ago

Did you vote last time?...to 'apolitical aam aadmi urban shopper' vote is not mandatory...so you are democratic?... So what ever shop either WallMart or Hawker market ,Govt will give to you ,you need to take...You don't have choice...When you had litle income or bekar..you got things from Kirana shops...Now your income length increases,gloring Wall Mart attracting you..... You are merely a buyer....Macro- Economy does not depend on you.............Remeber FDI in retail is not coming for you only but all type of cabable buyers.......
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Venky a day ago

I think the outlook here is to control the outside parameters rather than self-discipline. Its exactly the kind of mentality they show in the movie "Thank you for smoking". If people are falling for Cigarettes, ban them. If Burger King and McD are offering fast food which is not a healthy choice, crucify them and ban them. I believe it has to be free will and choice. I enjoy the occasional "extra" purchase and when I am really keen on getting few items, I would go with them and not get distracted. On similar arguments, you could string so many industries - such as entertainment (I go to cinema to watch movies, not eat popcorn!), shopping malls, clothing lines, impulse purchase inducing 'carts' at malls etc.
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Niranjan a day ago

Excellent article. Captures a lot of points about general retail stores than Wal-mart in particular. I guess the name Wal-mart was used frequently as it is currently under the limelight, however there are a lot of tricks those guys use that our Reliance Megamarts & DMarts still need to figure out.