Tuesday, June 19, 2007

A twist in the retail story

There has been a new development in the Indian Retail Onslaught Scenario.

The Government of India has come up with a scheme to introduce licencing for large retail players planning to open retail outlets for the sale of food and grocery items.

The plan, as it appears, is that anyone wanting to open a retail outlet to sell food and grocery items - including grains, fruits, vegetables, edible oils etc. with a space of 10,000 square feet or more will have to procure a licence from the local urban administrative body - the Municipal Corporation or its equivalent.

It may be recollected that the Reliance Fresh outlets in Ranchi, Indore faced stiff opposition from the local sabjiwalas (vegetable vendors) recently. Considering the shop size limit of 10,000 sqft it seems that outlets like Reliance Fresh, that are already operational in some towns, may not come under its perview as they occupy of much smaller premises.

It remains to be seen how much this proposal will effect the retail ventures of the big guys, especially Reliance and Bharti - both of whom have been preparing in a big way to open a chain of retail outlets in the country. Their outlets are being planned with sizes ranging from 50,000 sqft to 1.5 lakh sqft of floor space.

Many of the industry bigwigs are raising eye-brows at the very thought of licencing. The past experience of the licence regime have not been very good and a lot of apprehension creeps in with the very thought of it being reintroduced.