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BW Businessworld

Freed, At Last

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Brace up for the next wave in consumerism. Lobbies of all sorts may have tried to convince the government that foreign direct investment in retail could be a panacea for food inflation, but the green signal to foreign multibrand players is more likely to be a booster shot for consumerism. Even forced consumerism, of the kind Indians are yet to experience.

Away from the politics of the bulls and the ploughs, and the board room jabber about FDI changing India's farming sector, the government decision is set to transform how retailers sell and consumers buy in segments such as electronics, furniture and apparel. In fact, apparel and electronics are already among the most organised businesses in India — brands corner $16 billion, or 32 per cent, of these two segments valued at $50-billion.

Apart from America's Walmart, Sweden's furniture maker Ikea, French retailer Carrefour, Britain's Tesco and Japan's Lawson are raring for an India entry. And they will bring irresistible bundled offers, vast variety and much improved customer care. Another noticeable change could be integration of financial services (read easy consumer loans) with retail.

But interestingly, both Indian and foreign retailers might discover that it is not the local kirana store that is their main rival, but domestic online retailers. Unlike in the West, organised retail and the online sellers started out almost simultaneously in India. As the new dynamics play out, some businesses will fight and succeed, while others will die. But the beneficiary, undoubtedly, will be the consumer.

(This story was published in Businessworld Issue Dated 05-12-2011)