Pothik Ghosh (ET)FOR petty shopkeepers and hawkers corporate retail could well prove to be a difficult customer. A paper, based on a sample survey conducted in Mumbai and published in the Economic and Political Weekly (June 2-8, 2007), has revealed that malls, centres of organised corporate retail, threatened 50% of small shops with either a substantial decline in sales or permanent shutdown. Those are ominous portents. More so, since retail giants like Wal-Mart-Bharti, Reliance planning to expand their share of the trade from the current 3% to 15-20% over the next four years. In fact, the value of organised retail industry is projected to increase to Rs 1,000 billion (2.8 times of its current valuation) during that period.
The survey — which was based on a randomly chosen sample of 82 small retail shops and 30 hawkers within about one-kilometre radius of four malls (one in Lower Parel, another in Mumbai Central and two in the Bhandup-Mulund area) — does show that the impact of shopping malls on unorganised retail is not uniform, but varies in accordance with the type of business activity being pursued by shopkeepers and mobile vendors. And so while it did turn up the unexpected (11% of the sample reported an increase in sales with 18% remaining unaffected), that was hardly enough to mitigate the disturbing discovery that 71% of the sample reported decline in sales. The maximum number of shops/hawkers (27.5%) in the sample reported a decline in sales that was more than 10% but not more than 20%. Unorganised retailers who reported sales decline of less than 10%; more than 20% but not more than 30%; and more than 30% but not more than 40% comprised 22.5% each of the sample. Only 5% of the sample reported a fall of more than 40% in their sales.
Vegetable and fruit sellers, and electronics and electrical shops have, within the general sample of unorganised retailers, been the worst hit with all of them (100%) reporting a decrease in sales. (See Table 2.) The dip in sales was found to be in the 70-81% range for shops with inventory valued at up to Rs 25 lakh. This decline was considerably lower (67%) for shops with inventory value of more than Rs 25 lakh but less than Rs 50 lakh, and none at all for shop(s) in the more-than-Rs-50-lakh category. (See Table 1.) As for drop in business by shop size, outlets that figure in the 400-500 sq feet bracket have been the worst hit with 90% of them reporting a slowdown. This decline, however, becomes relatively less alarming as we move to the 500-600 sq feet (67%) and more than 600 sq feet (50%) brackets.
Surprisingly, while 75% of itinerant vendors and below-100-sq-feet shops taken together report reduction in commerce, the figure on the same parameter in the 100-200 sq feet and 200-300 sq feet shops are 35% and 52% respectively. But instances of loss of jobs, despite such alarmingly widespread decline in the business for unorganised retailers due to malls, have surprisingly been few and far between. In all, only nine of the 112 retailers who comprised the sample had laid off their staff since the malls had come up in their respective areas — in all, 11 hired hands (3% of the original workforce of 401 in the units that made up the sample) had been sacked. But that, more than anything else, was on account of the sample largely consisting of family-owned small shops, with 60% of them with no employees.
So, decline in sales would, in this case, be reflected not so much by retrenchment but reduction in earnings per head. Such a situation is as perilous, if not more, than rise in unemployment as it would lead to a rise in the population of the informal working class, what with operations of a large number of above-subsistence level, petty accumulatorbusinessmen being rendered unviable and redundant.
