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Some facts and a tough question.


Now having established some ground rules, let’s face some dirty facts:


  1. Retail industry is one the most important sector in India with about 5% of population directly or indirectly linked to it.
  2. There is nothing the foreign MNC retailers can do to the present population of retailers and their stakeholders that Indian Mega retailers cannot do.
  3. India has little more than Three times the population for USA but the US per capita income is roughly 13 times more. Hence the retailers though they can serve more people and gauge more footfalls, won’t be able to sell or profit in equal measure – unless they are betting on surging per capita growth in next decades.
  4. The organized retail industry for all its wonderful growth (from a zero base) to present state has been a  magnificent failure. (How else do you explain the supposed inefficiencies in the sector? How else can the foreign retailers think there is more space to conquer here? Either the entire charade is to fleece the foreign retailers or the present mega retailers have grossly failed and under-performed)


Why does retail industry exist in India in its present situation?

Why does retail industry exist in India in its present situation? The answers much like Land Reforms is purely a social one. Retail industry has been the sponge which has soaked up much of the governmental inefficiency. The inefficiency in providing good primary education, in providing technical education, in failing to create industries / factories that create jobs, with government not doing enough to create a ecosystem of entrepreneurship and many more such failures.

In other words, the retail Industry in present state is a standing monument of Indian governments’ six decades of inefficiency – its failures in education, job creation goals and social welfare.

Retail industry is so large and yet so utterly fragments for a reason. Retail Industry is the low cost, low entry, low risk, and low qualification with better than subsistence profits. When the government which prides on the largest youth population goes on to create – jobs at next to nothing percentages.

Retail industry currently is one large pit of misallocated capital. More you study the reasons of its existence, more you will find these are “desperate capital” and (let’s say 60%) of this capital cannot be reallocated into different industries due to incapability of the patrons. (They have to be retired in a gradual evolutionary way and not to be thrown out with bath water.)

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