See end for attribution[/caption]Last week I went a bit overboard – well it’s a normal week - and ordered numerous books – Amitav Ghosh in particular as I’m going to his book launch - and computer speakers, so I could listen to my favourite podcasts. All this shopping arrived the next day, with the delivery company telling me to the hour when the shipments would arrive. My street is full of delivery vans during the day and over the years I’ve come to know many of the drivers – they are invariably male – but despite that my name continues to baffle them. Now Amazon suggests that it will be able to deliver packages the same day using drones, although I’m not quite sure how that might work on my central London street; perhaps platforms and chutes on my roof?
Our habits have changed. Internet shopping in the UK certainly is here to stay, certainly for books, clothes, and for some families for food, although I quite like the food shopping experience particularly at the ethnic shops and Quality Foods in Hounslow.
Some might say that this delivery revolution is a new phenomenon. However, my mother tells me that when we arrived at a new hospital in the UK – my father was a doctor – the consultant’s wife, if she was friendly and helpful, would introduce her to the local shopkeepers. There would be generally be a local grocer, baker, fishmonger and butcher. At some point in the morning my mother would order by phone from the relevant shop, and in the afternoon a boy on a bike would deliver the provisions. Payment wasn’t expected immediately but later. This doesn’t sound that different to the internet food shopping of today.
Some 20 years ago a cousin from Calcutta came to stay with us in Birmingham and I suppose she was shocked in a good way at the food, and the choices available, in our local Safeway. On my subsequent trips to India, and without being aware of the social and political constraints, I felt that as the economy expanded invariably supermarkets in India would be a major growth sector. I am reminded that apparently one of the reasons for Vladimir Putin’s continuing popularity in Russia, which liberalised economically at about the same time as India, is his perceived role in creating the conditions for new supermarkets to open. For the Russians these supermarkets give them a choice that was not available under the old regime.
I always found Calcutta backward in its retail sector. There was in the past only one decent bookshop, Oxford Bookshop, in a city the size of London and magazines & periodicals were sold on the street. Yes there are more sophisticated malls now but Calcutta still does not have the retail sector a city of its size needs.
Sue and I both remember being in France in the 1970s and 80s and seeing the local Carrefour and Leclerc hypermarkets, which were of a different scale to supermarkets then in the UK. Sue remembers France in those days being a 'foodie heaven' - with most hypermarkets stocking a huge range of cheeses, fish, fruit and vegetables unavailable in the UK at that time. Most developed countries’ retail sectors moved in the same way. But now in the UK there is more of a focus on the smaller supermarkets such as Tesco Express, and Sainburys Local, as well as the emergence of relatively low-cost supermarkets such as Aldi and Lidl. We appear to be in a post-hypermarket era, particularly as Tesco announces huge losses largely caused by write-offs in its property portfolio.
Now as Robin Pagnamenta reports[i] in The Times India is supposedly at the beginnings of an e-commerce revolution with investments from Amazon, and with local e-commerce rivals such as Flipkart and Snapdeal receiving some of $1b in funding. Clearly investors expect India, in terms of e-commerce to be the next Holy Grail.
Pagnamenta suggests that India, as with telecommunications moving from low landline penetration to 4G mobile, will leapfrog from a third world retail sector into the Internet e-commerce era without the intermediate “bricks and mortar” stage. Up to now some 90% of India’s $500b retail sector has been dominated by backward local shops, shacks and carts. Any newcomers into the supermarket sector were discouraged by rules on local ownership, and shop size amongst others. But as rules changed it was expected that global supermarket companies such as Tesco and Wal-Mart would enter the India market; they often had limited joint ventures ostensibly to learn about the marketplace but no serious inroads were made. It was often thought that the entry of these foreign operators would dramatically increase the range of produce, and ready meals perhaps available.
The supermarket entry narrative would suggest that the supply chain would be modernised so that food was no longer wasted on a mass scale. Figures are hard to come but perhaps 40% of all fresh food rots in India somewhere along the supply chain.[ii] The main reasons appear to be the lack of refrigeration, poor roads and corruption. I doubt any European or American supermarket would tolerate these levels of food wastage particularly as it would impact directly on their bottom line.
There are some indigenous supermarket chains such as Spencers, and Reliance Fresh but levels of penetration across India and amongst the middle classes appears to be relatively low. Why? Most homes still have servants, who could be sent shopping to the local markets, shops and shacks. In addition, if, for example, it is very cheap to have a cook then why spend money on ready meals? And as we know takeaway food is available cheaply. Pagnamenta also suggests that with poor roads, few Indians would want to drive to an out of town supermarket despite its attractions.
Nevertheless with these investments as noted earlier it does appear that the Indian retail sector will be undergoing changes. Small grocers do already offer delivery as in the UK in the 1960s. Would a smartphone user order produce to their home? I’m not certain, especially as the market is probably a single person or a couple who could easily stop off on their way home as we now generally do in the UK. For the family with servants there seems to be no compelling reason to order food online. Some goods perhaps, electronics or books might work on an e-commerce basis.
If deliveries do become commonplace there will no shortage of willing employees to become drivers, but probably because of the risk of theft, and the low cost of labour most vans would have two employees on board thus negating some of the cost advantages. Drivers would need a level of initiative, literacy and IT awareness and for those with these skills there are many other opportunities.
I do wonder if this focus on e-commerce in India is misplaced. Food production and its supply chain needs to be overhauled and moving straight to e-commerce is not the way to achieve it. In the West the supply chains were already relatively smooth and e-commerce was offered from existing warehouses. Amazon began by siting itself next to a large book warehouse. Educated and middle-class Indians are still coming to terms with some changes in the retail sector and it seems too early to make the jump to e-commerce. Delivery drivers will be hard to recruit and they would have to cope with the same poor roads. Were I in authority, I would still want to encourage Western "bricks and mortar" retailers to enter the Indian market.
Photo: by Milei.vencel (Own work) Creative Commons
[i] The Times, 20th April 2015
[ii] http://www.bbc.co.uk/news/business-28139586; http://www.foodnavigator-asia.com/Policy/India-damned-by-food-wastage-report
