Shopping Mall Impact on Small Bussinesses

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Impact of Malls on Small Shops and Hawkers
A small sample survey of the impact of malls on small shops and hawkers in Mumbai points to a decline in sales of groceries, fruits and vegetables, processed foods, garments, shoes, electronic and electrical goods in these retail outlets, ultimately threatening 50 per cent of them with closure or a major decline in business. Only 14 per cent of the sample of small shops and hawkers has so far been able to respond to the competitive threat of the malls with the institution of fresh sales promotion initiatives. ANURADHA KALHAN

India is attempting to do in 10 years what took 25-30 years in other major global markets. However, to-date there is very little understanding of what the impact of corporate retail will be on the so-called unorganised retail sector and the agricultural sector (the country’s two largest sources of employment). This preliminary study is aimed at investigating the impact of malls on small shops and hawkers.


rganised corporate retailing is poised to become the business of the decade in India. Retailing presently contributes about 10 per cent of India’s gross domestic product (GDP) and 6-7 per cent of employment. With some 15 million retail outlets, India has the highest retail density in the world. But only 4 per cent of these outlets are more than 500 sq ft in size and almost all are familyowned shops and establishments [Mukherjee and Patel 2005]. The value of organised retail is expected to grow 2.8 times in the coming four years to a Rs 1,000 billion industry, attracting many global retail chains like Wal-Mart, Tesco, and Carrefour [Outlook, October 16, 2006]. Foreign direct investment (FDI) up to 51 per cent in single brand retail was permitted last year and multi-brand retail is expected to open up to FDI soon. Meanwhile, Indian retail chains like Reliance Retail, Croma, Aditya Birla group, S Kumars, Shoppers’ Stop, Westside, Subhiksha, and Trinethra have all been consolidating their realty, brands, market shares and locations. Retail giants, the largest being Wal-Mart-Bharti, Reliance, AV Birla group and Future group (Pantaloon), plan to expand the share of organised retail from the current 3 per cent to approximately 15-20 per cent in four years by investing more than $ 25 billion (excluding real estate investment). Of the proposed investment, 60-65 per cent will go towards setting up the supply chain for food and groceries [CII – A T Kearney 2006]. What is particularly disquieting is the pace at which corporate retail chains are entering and expanding in the retail market, with analysts quoted as saying that

Parel is at least four years old, the Mulund malls are less than three years old but more than one year old, and the Bombay Central one was 3/4 months old at the time of our survey. Shops in both Mulund and Bhandup within a one-kilometre radius had been surveyed in assessing the impact of the two malls in Mulund. A questionnaire was administered to the shop owners or operators in the absence of the owners. The first part sought basic information on floor size, value of inventory and employment, both family and non-family. The second part of the questionnaire sought data on the impact on sales, profits, employment, working hours and high value customers lost, if any. This part of the questionnaire sought information from the respondents with reference to the period after the mall started operations in their area. The third part asked the respondents to attribute causes for the decline in sales, if any. The factors causing competitive disadvantage were listed – cost prices, operating costs, taxes, selling price, and any others. The respondents were also asked to rank the intensity of the threat they faced and whether their Table 1: Distribution of Sample Shops/Hawkers by Floor Space Sq Ft Hawkers ≤ 100 sq ft 100-200 200-300 300-400 500-600 More Total Number 30 14 25 22 10 6 4 112 Per Cent of Total 28 13 22 20 9 5 4 100

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