Organised retailers affect unorganised retailers' sales,profit:study

New Delhi, May 26 (UNI) Unorganised retailers have experienced decline in sales and profit in the initial years of the entry of organised retailers, according to a report released by city-based think tank ICRIER today.

The report titled 'impact of big retail on neighbourhood stores', said unorganised retailers' sales and profit have declined. However, the adverse impact weakens over time.

The study, which will have a bearing on the government policy on organised retail, has recommended nationwide uniform licencing policy to 'facilitate modern retailing'.

It also recommended facilitation of cash and carry outlets in the organised retail for sale to unorganised stores.

The study, which has been submitted to the Department of Industrial Policy and Promotion, however, did not deal with the impact of foreign direct investment (FDI) on small retailers.

''The study has nothing to do with the impact of FDI on retail,'' Indian Council for Research on International Economic Relations (ICRIER) CEO and Director Rajiv Kumar told reporters here.

However, it admitted that initially, mom-and-pop stores, in the vicinity of big malls, have seen drop in their sale and profit.

The impact of FDI on unorganised retail is being assessed by the National Council of Applied Economic Research (NCAER).

The study said, ''both consumers and farmers benefit from organised retailers. The low-income consumers save more from purchases from organised retailers.'' The report explained that the farmers benefit from organised retailers as they have the option to sell directly to organised retailers. Also, there is no evidence of decline in the overall employment in the unorganised sector as a result of the entry of the organised retailers, the report added.

The report said unorganised retail business is likely to grow at 10 per cent per annum from 309 billion dollars in 2006-07 to 496 billion dollars in 2011-12.

The unorganised retailer will not be able to meet its growing demand and hence, the share of organised retail is going to increase at a rate of 45-50 per cent per annum, it added.

The organised retail, which currently contributes around four per cent of total retail sector (annual sales of 322 billion dollars in 2006-07) is likely to grow at much faster pace to increase its share of total retail trade to 16 per cent by 2011-12.

The findings of the survey are based on survey of 2,020 unorganised small retailers across 10 major cities, 1,318 consumers shopping from both organised and organised retail outlets, 100 intermediaries and 197 farmers.

UNI AK SG