!VAR HAGENDOORN

A Short Note about Wal-Mart's Entry into India

November 2006 Wal-Mart announced its plans to enter India by way of a joint-venture with India based Bharti Enterprises Ltd. India restricts so called Foreign Direct Investments by law to protect the local retail sector so Wal-Mart had to find a side entrance.

While supermarkets and today's hypermarkets do have benefits, they also produce ripple effects that are often overlooked. One such ripple effect is the transformation of shopping culture and the destruction of social ties.

For one thing Marx's observation (or assertion if you prefer) that workers in an industrial organization are alienated from the products they produce is true in the case of groceries, bakeries and the likes vs supermarkets. At a market you should usually go to the busiest stalls, because those are the ones that sell the best produce. Vendors who sell low quality products are forced out of business or pushed towards the fringes. Supermarkets don't care much about the quality of the products on display. They just fill the stacks. The cheapest supermarkets don't even bother to shelf their products. They simply stack the boxes the products come in to save on labour costs. I should add that I don't blame supermarket employees for not caring, because their jobs are not enviable. On the other hand, they get paid to do their job.

Extensive data warehouses with years of consumer data notwithstanding, small shopkeepers have a better knowledge of their customers than supermarkets. Supermarkets have to keep stock of a large product line to cater to the demand of the widest possible range of potential customers. Supply therefore always has to exceed demand. This in turn requires the industrialization of food production to meet the demand of supermarket chains. I should add that I believe this is necessary to feed an increasing urban world population. I should also add that fresh produce is better stored in plastic and in the kind of refridgerated environments found in supermarkets. Markets therefore result in a different kind of overproduction.

Small shopkeepers also fulfill a social function. They enter into a relationship with returning customers. They can give credit to loyal customers in the form of delayed payment if the customer happens to be short on cash.

While I don't want to romanticize too much I'm always happy to see that in Hong Kong, despite the arrival of hypermarkets in the new towns, the street markets still thrive.