FDI in Retail sector:
No I am not in the favor of FDI in retail.
"Competition is always in the favor of consumers, monopolies not".
1. They adopt Predatory pricing strategy.
Predatory pricing (also undercutting) is a pricing strategy where a product or service is set at a very low price, intending to drive competitors out of the market, or create barriers to entry for potential new competitors.
How it works:
Big brands like Wal-Mart, Tesco etc. Buys goods from farmers or manufacturer in dirt cheap price then they sell those products to customers after adding up their margin on it. This process continues till other competitor exit from the business.
After then they start up rising their profit margin on the product because it is only available in their stores.
1. On feb.2008 European Union adopted a declaration because of farmer's protest around the euro zone. In that declaration it was stated that - evidence from across EU suggests large super stores are abusing their power to focus down prices take suppliers to unsustainable levels and impose unfair condition on them. The declaration came because of farmers protests in front of super markets across European countries like France, Italy, Netherlands, Belgium the nature of the complaints are similar in the zone, which are as follows:
The giant retailers were squeezing the pricing paid to the farmers for products like milk & meat etc. And in some instances forcing to sell at below cost prices.
2. On jan 2010, Bob Russell, MP of Britain told that "Britain was a nation of small shopkeepers all of that has changed and it is because of the super markets lead by the giant companies. It's impossible for small shopkeepers who have so much to offer to compete with the prices of super market. One on six small stores in Britain has gone out of business in the last decade."
3. New initiative started in USA which is named as small business Saturday...
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