Saturday, May 10, 2008

Shopkeepers, traders, merchants

Is Kerala a land of traders?

Napolean reportedly called England a land of shopkeepers. Closer home, some observers like to slap that epithet on to Kerala. In the absence of a rousing industrial culture, the closest Keralites come to displaying some entrepreneurial dash is when they are behind a shop counter.

The proverbial Malayalee teashop owner who greeted Edmund Hillary atop Mount Everest with a rousing cup of hot tea may be the work of a feverish imagination, but it does point to the ubiquitous nature of the Keralite shopkeeper mentality.

Thus it was not really astounding to learn that the Kerala Vyapari Vyavasayi Ekopana Samithi (KVVES), the State's largest and most powerful organization of traders, had recently declared that the organization had decided to "physically" prohibit multinationals (MNCs) from opening large retail chain stores in the State.

The KVVES distrust of MNCs is nothing new. Some years ago it locked horns with Hindustan Lever over the margins that the company was passing on to its retailers. That it had to finally cave in without wresting many significant concessions from India's largest fast moving consumer goods (FMCG) manufacturer says as much about the divisions amongst Kerala's traders as about the power of the MNC.

It is, however, difficult to understand - or sympathise with - the KVVES stand. Not only does it have nothing to really fear from the operations of a foreign retail chain or a strong FMCG firm but it also ought to be actually encouraging more such entities to open shop in Kerala. The KVVES is perhaps underestimating the power of its own members - who number close to 5 lakhs - and the ingenuity of Kerala's shopkeepers.

It only has to look at the Margin Free Market, the chain of supermarkets started by the Consumer Protection and Guidance Society, to realise the weakness of its claims that a foreign retail chain will wipe out Kerala's traders, especially the smaller ones. Registered in 1993 in Thiruvananthapuram, the State capital, the Margin Free Mark et is a co-operative venture of the Consumer Protection and Guidance Society and the management, which set up the first Margin Free Market, in Thiruvananthapuram on January 26, 1994.

Since then the group of supermarkets has spread to become India's largest retail chain, offering products at prices marked down as much as 40 per cent of the maximum retail price. Even a large well-established supermarket group like Foodworld or Spencer's from the RPG stable has not really been able to upstage the Margin Free brand.

Given the Keralites' increasing disposable incomes and their tendency to opt for convenience goods even at the cost of fancy packaging, it is possible for the State to accommodate several more retail outlets. The KVVES ought to realise that the strength of Kerala's trading community - as well as the organisation's own prowess - stems from the free play of competition.

Rather than threatening to block newcomers, the KVVES ought to be encouraging them to enter, in a more-the-merrier spirit. After all, the organisation does have an altruistic side to it: soon after the December 2004 Indian Ocean tsunami, its Kollam district unit announced it would construct 42 shops for the traders of Alapad who lost their shops to the tsunami waves.

So, evidently, the KVVES has a heart. Now it needs to find its guts too. After all, as Oliver Goldsmith said, "Surely the best way to meet the enemy is head on in the field and not wait till they plunder our very homes." Competition, not confrontation, should be the motto for this land of shopkeepers.

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