“Club of Knowledge Hunters”

Kiranas to survive retail onslaught: PwC

Posted by retailigence on December 10, 2008

A switch from unorganised to organised retail will bring in huge benefits, not only for the government in the form of taxes, but also for consumers, farmers and unorganised trade participants alike in a big way, says a report by PricewaterhouseCoopers (PwC).

Apart from helping India become a sourcing hub for the world, organised retail will also help create huge employment opportunities, introduce newer products in the market and create lasting relationships between farmers/producers and the industry, says the report, which was in released association with Confederation of Indian Industry here on Tuesday.

At the release of the report titled ‘The benefits of modern trade to transitional economies’, NV Sivakumar, executive director and leader (retail and consumer practice), PwC, said that it has been observed that contrary to critics’ views, the growth of modern, organised trade in transitional economies does not stifle unorganised retail. Rather, it helps create a level playing field, while ensuring continuous growth of kirana stores. “Kiranas cannot be replaced by organised retailers in India. Their relevance will be felt more as there is no alternative to them in areas where organised retailers cannot enter,” he pointed out. The growth of organised retail will lead to creation of local distribution channels, which in turn will improve the quality of produce available in local markets. In addition, engaging with local suppliers will boost the local economy and also lead to generation of more employment, he noted.

Among other things, the report mentions that the shift from unorganised to organised retal will bring in Rs 24,000 crore into the State exchequer by 2010, in the form of value added taxes (VAT). The report, which was prepared before the economic downturn hit India, has taken into consideration six major factors: consumer benefits, contribution to exchequer, benefits to farmers, growth of kirana stores, employment generation in rural, semi-urban areas and engaging small vendors into modern retailing.

The report says that although the retail sector has succeeded in evolving as an organised revenue generating sector, it continues to be challenged by some issues under the present indirect tax regime. On the consumer side, the report says that modern trade will result in increased availability of choice in products and services, rationalisation and convergence of prices, better quality of food and non-food products and a zero-tolerance policy for inefficiencies, since consumers will be unwilling to pay for substandard products.

The report also point out that organized retail will, by establishing an efficient supply chain that links farmers and small manufacturers directly with retailers, maximise value for all stakeholders.

Sources :- The Financial Express


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