So, organised retail is good for one and all

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Organised retail is good for consumers, producers and also the intermediaries. This is official now with the government-mandated economic think tank Icrier formally announcing the same through its study. The Icrier study report on the impact of organised retail on the unorganised sector, which was commissioned when the atmosphere in the country was explosive with the advent of big, organised retail chains being unveiled by corporate biggies like Reliance Retail and Aditya Birla group, has clearly made a case for growth in favour of organised retail, as unorganised retail will not be able to keep pace with the demand requirements.

FE was the first to report exclusively on the findings of the report in its edition dated May 24. The Icrier study did case studies on domestic retail chains like Subhiksha, Trent Ltd, Infiniti Retail, Future group, ITC Chaupal Sagar and Mother Dairy.

The study, which looks into the impact of organised retail on traditional retail stores, consumers and the farmers has spelt out a couple of interesting trends. Allaying fears that the modern trade would rob the unorganised sector, the report says in the Southern and Eastern parts of the country there was no such finding, on the contrary there was increase in the employment levels in the sector. The study further notes that the adverse impact of the organised retail on the unorganised sector was an 8-9% decline in the profitability. This too was seen to reduce over four to five years of operations. The Eastern region with 71% reported the maximum amount of decline in the profit while South saw the least decline with 30% reduction in the profit margins.

The report interestingly points out that the sample revealed that a mere 1.7% of traditional retailers were shutting shops down each year and were doing so on account of competition from the organised retailers. With the highest figure being 3.2% in the West and the lowest being 0.4% in the East.