‘Mom and pop’ stores

I was recently at the Jathika Pola in Narahenpita and bought a kilo of dhal for Rs. 160. I did not realise at the time that I was paying much more than the market price; it was only later that I found the supermarket was selling the very same dhal at just Rs. 100 a kilo.

Needless to say I felt cheated, but I also realised that despite the general perception, a ‘mom and pop’ store is not really a cheaper option. This is mainly because there is no mechanism there to ensure price control, especially since a bill or a receipt is not a must.

Supermarkets, on the other hand, have really changed the shopping landscape (literally) of this country; and in all probability (as in the case of the dhal) gives us good prices. It’s nice to see how supermarkets these days have clearly printed prices pinned up on boards, which helps to create a sense of transparency for customers.

While looking at the supermarket concept as being good for the economy and the fact that they are helping in controlling the cost of living, I have a question about what these chain stores are doing to the ‘mom and pop’ stores, which are also very much a part of the economy of this country.

With supermarkets becoming prolific all over Colombo, the suburbs and even out of town, it is important for someone to look at the impact it would naturally have on local businesses. While we try to solve one problem, i.e. the cost of living, through this modern option, are we creating another? This is something worth looking at.

Neighbouring India which is probably faced with a similar situation is said to have suspended its plans to throw open its huge retail sector to foreign companies such as Wal-Mart. According to a recent news report on CBS News, the initial decision last month to allow foreign companies to own 51 per cent of supermarkets in major cities and 100 per cent of single-brand stores, which had been hailed by the business community as a long overdue reform, is now being retracted by the Indian Government.

Although the Government had earlier said foreign retailers would bring better prices for farmers and lower prices for consumers by cutting out middlemen and upgrading the country’s infrastructure, they are rethinking their stance.

The report says: “The world’s largest retailer faces suspension of its plan to move into one of the world’s biggest potential retail markets after India’s Government bowed to protectionist pressures. But opposition parties and even some members of the governing coalition protested against the deal, saying it would crush local ‘mom and pop’ stores that are the heart of Indian retailing. Opposition lawmakers disrupted Parliament for days in protest.”

It’s not surprising that there was such a big opposition to this move, considering the sheer size of India’s retail market, which would be humongous. A giant like Wal-Mart entering it could well wipe out large portions of traders operating in India’s big cities.

Another website called Hubpages analysing this situation in India says: “It has been a long debate – over 10 years. India hopes to generate 10 million new jobs. Yet, Indians are angry at their Government’s decision. The reason is India’s heritage and its past dealings with foreigners. The poor see their plight as a product of greedy capitalism and foreigners have made profits in the past, which Indians equate with loot and greed, not benefits that help all citizens.”

The same analyst says: “China embraces the big-box stores like Wal-Mart, seen as opportunity. Maybe it’s the culture and history. India has not been a colony for a long time now; it should see foreign investment as opportunity. Those in the IT sector have learned by living in the US and doing business there the retail model and returned to India to do the same. They have prospered.”

This is how the Americans feel, that Asia needs to be opened up. However, even though the Indian Government has come under severe criticism for backtracking on their original decision, there might be some credit in wanting to rethink their decision. South Asian countries are badly in need of Foreign Direct Investment (FDI), but even when receiving such investments we need to look at them carefully and see how they will affect local markets.

The ‘mom and pop’ stores, which were the backbone of American economy (what they call the main street), is one of the reasons why middle class America is facing problems. Large companies have taken a stranglehold of the American economy and there is no trickledown effect to the rest of the community; the same way it can happen in India and the same way big supermarket chains in Sri Lanka can slowly wipe out our ‘mom and pop’ stores.

Therefore, it is the responsibility of all concerned, including the supermarket chains, to manage this environment so that there won’t be a drastic social impact which would have a lasting effect on our economy.



(The writer, a PR consultant and head of Media360, was previously a mainstream journalist in print and electronic media. He also edits a new media website.)