Organised retail will not kill kirana shops, according to a major nationwide study by Icrier. The study sponsored by the government to gauge the impact of big corporate houses entering retail show that small shops in the vicinity of large retail chains can regain profitability even if they initially see a decline in business.
The much-awaited Icrier study has found in a draft report that organised retail does not negatively impact unorganised retail in the long-run on an ?absolute basis?. Investment in retailing by corporate houses has created a political storm. The commerce and industry ministry had in February commissioned Icrier to assess the impact on employment and survival of small retailers in the wake of big businesses rolling into the sector. Small-shop business accounts for 97% of the total turnover of the sector.
Icrier, which was initially slated to submit its report by August, will now be submitting it in January. Icrier has broad-based its study to include the functioning and profitability of the unorganised retail segment in the vicinity of big retail chains. This would provide a benchmark to view whether or not traditional trade, located near the emerging retail chains, is able to perform as it would have if organised retail hadn?t emerged in a particular area.
For instance, if a retail shop registers growth in profit of 10% with a mall in the vicinity, a similar shop situated far away from that area has a higher profitability of around 14%.
Sources said the report would recommend measures to help offset the negative impact which large retail chains could have on the small shops. For this, Icrier is studying the retail models Malaysia and Thailand are using. FE had earlier reported that the economic think-tank had decided that access to cheap and easy institutional credit would definitely help the unorganised segment grow in an environment where it has to thrive among large players.