The High Cost of Low Prices !

Banana at throw away price at Reliance, oh sorry its Reliance Retail Price popularly called as R.R.P not M.R.P, Big Baazar,Pantaloon,Vishal Mega Mart selling household wares at its own mega-marts, the global giant Wal-Mart making an entry into the Indian retail market promising to sell kirana and clothes and every thing at low prices always-it seems like paradise is moving around Indian consumers . But how long will paradise continue?, or will a few months of ‘happy-deals’ lead to a lifetime of monopolistic markets and manipulations by corporate giants .

It is estimated that for every 1,000 employment opportunities generated for urban graduates as Wal-Mart salespersons, 15,000 poor people will go out of job as Indian cities will have no need of pheriwallas, subziwallahs, fruit-sellers, and local kirana shops.

Retail trade contributes around 10-11 per cent of India’s GDP and currently employs over 4 crore people. Within this, unorganised retailing accounts for 96 per cent of the total retail trade. Traditional forms of low-cost retail trade, from the sole trading shops and kirana stores to the handcart and thelawalas, together form the major pie of this sector. Since the organised sector is less than 8 per cent of the total workforce in India and millions are forced to seek their livelihood in the unorganised sector, retail trade being an easy venture to enter with minimum capital and infrastructure needs, acts as a kind of social security net for the unemployed. Organised retail sector has witnessed tremendous growth in India in the last 10-12 years and is growing at a much faster rate than the overall retail sector. This trend of growing share of organized retail trade inevitably causes harm to small retailers and badly affects their livelihood.
Cost efficiency or Squeezing Producers . Those who beat the drums of FDI and create hoopla and hype often says the Indian consumers would benefit from the low prices offered by the behemoth corporate retailers. It is also argued they would develop an “efficient” supply chain, not only to cater to the Indian consumers but also the international market and therefore our manufacturing and agriculture sector would benefit from them. The ability of the global retail chains to sell at low prices is often attributed to their “efficiency” in sourcing goods from their lowest cost producers around the world. What underlies this so-called “efficiency” or “cost reduction through better inventory and cost management” is the ability of these retail chains to squeeze and blackmail producers across the globe using their monopsony power. The sheer size of a giant retail chain like Wal-Mart enables it to exercise buyer power over the producers of all kinds of prducts, from agro products to FMCGs, across the globe. If these retailers are to sell goods to Indian consumers at prices, which are cheaper than what prevails today while sourcing their goods from Indian producers, the latter are definitely going to be at the receiving end in terms of declining incomes. It is important to undertand here that European and American farmers enjoy heavy farm subsidy and prices of their agriculture produce is far lower than Indian counterparts. In case these Corporate retailers import the cheaper goods from abroad and they definetly will as their success pivots anround low prices, domestic producers and farmers would be displaced anyway. Problem further aggravates as cheap "made in china bug" will bite Indian manufacturing Industry too.It is difficult to understand therefore how the domestic producers would benefit from these giants.
No benefit to local Farmers-Instead of local seasonal produce from nearby villages finding their place in our kitchens and on our dining tables, we will have vegetables and foods that are mass-produced and mass-packaged, procured from captive farming where face-less multi-billion corporations will call the shots. To cap it all it will kill all indigenous produce and replace it with genetically modified crops.

The Behemoth Bentonville villian and an Economic Disease,called Walmart-Now,the big trouble is all set to enter Indian Market with its joint venture partner Bharti Enterprizes . Changed face and changed Golmaal and deceptive Tagline “Low Prices Always”to “Save Money,Live Better”. A Substantial Number of Wal-Mart Employees earn far below the poverty line -Wal-Mart employees don’t earn enough to support a family.Lower wages means low disposable income for community.When an employer pays low wages to its employees, the employees have less money to spend on goods and services in the community, which in turn reduces the income and spending of others in the community. In other words a reduction in wages has a multiplier impact in the surrounding area.

Bentonville giant destroys Environment -Between 2003 and 2005, state and federal environmental agencies fined Wal-Mart $5 million.

Wal-Mart violates Child Labor Laws.-An internal Wal-Mart audit found “extensive violations of child-labor laws and state regulations requiring time for breaks and meals.” [New York Times, 1/13/04]
Made in China Imports -70% of the commodities sold in Wal-Mart are made in China.

Wal-Mart’s factory workers are treated poorly.

Wal-Mart cares little for the safety of its workers

Wal-Mart closes down stores and departments that unionize.

Wal-Mart discriminates against women.

WAL-MART USES MONEY AND INFLUENCE TO PRESSURE POLITICIANS. -Jan gan gan man Adhjnayak.

Punchlines may change but philosophy and Values ?????

Who will save money and live better in country like India, where 300 million people are living below povery line and handful of multi billionares flying in personal luxury jets . We should remember that those who donot learn the lessons from the history are condemed to repeat them. NDA Govt's hallucination of India shining is the lesson. Manmohanji ,donot repeat it. Low Prices is nothing but an eyewash and benefits only afew middle class consumers at the of cost unemloyment and damage to Indian society.