Provision stores cheaper than Supermarkets: Study Finds

Nityanand Jayaraman

Proponents of FDI in retail have gone to town claiming that retail MNCs will help consumers by offering lower prices. Is this real or merely a tactic to pitch consumers against others in the retail chain who may be making a living out of reaching farm produce and other products from production centres to consumers? Going by other claims by the same lobby, one has reasons to doubt the claims of consumer advantage. For instance, FDI proponents’ declarations about employment generation are belied by facts. The Indian retail sector provides a livelihood to 40 million people — the largest single sector for employment other than agriculture. By contrast, Walmart – which, at $409 billion, has an annual revenue roughly the size of the Indian retail sector – employs a meagre 2.1 million people. In the US, it has been criticised for being a bad employer guilty of union-busting, underpaying workers and harassment of staff. FDI proponents also claim that big box retail stores – or the entry of MNCs in retail – will eliminate middlemen, and maximise returns for producers. Again, a study conducted by the US Congress found that for every $1 spent on food by a consumer, 41 cents reached the farmer in 1950s, as against a paltry 18.5 cents in 2006.

While Walmarts and Carrefours have not made their entry into India’s retail sector, chain stores like More, Reliance Fresh, Nilgiris and Spencers Daily already have. Given that big retail supermarkets have demonstrably failed in sustaining livelihoods and improving farm incomes, TN Labour Blog decided to see whether at least the consumer got something in the deal. The Labour Blog conducted a survey of two supermarkets and two family run provision stores in Besant Nagar, Chennai. The findings, in short, suggest that the consumer gets a better deal from the provision stores than from the supermarkets.

Below is the report of a study done by two school-going labour bloggers, Vishakha Raj and Rohit Krishnan of Chennai.

Supermarkets: A Raw Deal

By Vishakha Raj, with inputs from Rohit Krishnan

The below selling price analysis was done to inquire into the difference between prices in retails stores and super market of certain commodities. The methodology employed is straightforward involving two supermarkets and two retail stores. Twelve essential grocery items that anyone from any income group would need were used for price comparison between the types of stores. The minimum quantity of each good that was available was also taken into account.

 

Product

List of shops with the minimum quantity available and its price

AR stores

Nilgiris

Tamil Nadu Stores

Spencers Daily

Mustard Seeds

50g / Rs 5

(Rs. 5 per 50g)

100g/ Rs 13

(Rs. 6.50 per 50g)

50g / Rs 5

(Rs. 5 per 50g)

100g/ Rs 16

(Rs. 8 per 50g)

Urad dal

50g / Rs 4

(Rs. 40 per 500 g)

500g / Rs 46

(Rs. 46 per 500 g)

250g / Rs 22.50

(Rs. 45 per 500 g)

1kg /Rs 71

(Rs. 35.50 per 500 g)

Rice

250g / Rs 8

(Rs. 32 per kg)

1kg / Rs 50

(Rs. 50 per kg)

250g / Rs 10

(Rs. 40 per kg)

1kg /Rs 45

(Rs. 45/kg)

Channa dal

50g / Rs 4

(Rs. 4 per 50g)

500g / Rs 50

(Rs. 5 per 50g)

250g / Rs 31

(Rs. 6.17 per 50g)

200g/Rs34

(Rs. 8.50 per 50g)

Sugar

50g / Rs 2

(Rs. 40/kg)

1kg / Rs 70 (plastic packet = Rs 59)

250g / Rs 10

(Rs. 40/kg)

1kg /Rs47

Salt

1kg / Rs 16

1kg / Rs 16

1kg / Rs 8

1kg /Rs 16

Oil (Sunflower)

200ml / Rs 20

1litre / Rs 93

½ litre / Rs 47

1liters /Rs 70.96

Tooth paste

(Pepsodent)

40g / Rs 10

40g / Rs 10

50g / Rs 15

100g/Rs35

Hammam

Soap

100g / Rs 22

100g / Rs 22

100g / Rs 22

100g /Rs 22

Sunsilk Shampoo

8ml / Rs 2

_

Rs 2 per sachet

_

Egg(s)

1 / Rs 4

1 / Rs 4.25

1 / Rs 4

6 /Rs 37

(Rs. 6.17/egg)

 

The two factors – (price and minimum quantity available) – taken into account are relevant. The first factor (price) is relevant to everybody as cost is an important consideration for all. The second factor is more relevant to lower income groups; people belonging to this group may not have the cash flow to buy provisions in large quantities and store it. Often, smaller quantities are preferred, even if in some cases, that would mean a higher per unit price.

It is obvious from the above table that the price per unit of most provisions is lesser in the retail stores. The minimum quantity available is also lower here.

The fishing villages of Urur Olcott Kuppam and Odai Kuppam have a large working class population. Tamil Nadu stores and AR Stores also serve these communities. AR Stores are extensively patronised by working class people, while Tamil Nadu Stores has a mixed clientele, and Nilgiris and Spencers Daily cater almost entirely to middle classes and the affluent. It would be difficult for the working class people to buy their provisions in bulk (in terms of kilos). Being able to buy smaller quantities as per their daily needs is a benefit retail stores provide that super markets cannot. Such flexibility makes retail stores a vital part of any neighborhood.

In most instances, the smaller stores offer cheaper prices even on bulk purchases. The price per unit of product in AR Stores and Tamil Nadu Stores was lower than the supermarket for most of the products. For example the price of 1 kilo of rice in Balaji stores is Rs 32 Tamil Nadu stores is Rs 40 but in Nilgiris it is Rs 50. This is so for most provisions.

Both Tamil Nadu Stores and AR Stores offer home delivery and credit to customers. The supermarkets are more impersonal and offer neither home delivery nor credit.

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