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Indian Retailers Evolve Along With Economy


India's retail sector has begun attracting the attention of entrepreneurs and big businesses as the economy continues to grow.

Thirty-five-year-old Neema Chadha, a busy executive, used to spend her Saturday mornings hopping from shop to shop to pick up her weekly requirements of vegetables, fruits, groceries and meats. Now, she goes to recently opened Le Marché, a New Delhi supermarket that offers all this over three floors. Mrs. Chadha is happy with her new shopping experience.

"Convenience and easy availability, and it gives you a wider array of choices to make. You can easily compare over different products and prices and then take your pick," she said.

The owner of Le Marché, Mini Yadav, says she plans to open four more supermarkets in the capital. She already owns a successful bakery chain, and started the supermarket to tap into her base of middle-class customers who want easier, time-saving shopping options.

"Customers were going elsewhere for the other related products that they needed from what we were selling, so we thought, why not provide all this under one roof for our customers, and keep them to us?" said Ms. Yadav.

Stores like Le Marché are the forerunners of a change in India's retail sector, which has traditionally been dominated by small mom-and-pop stores that offer little choice. There are some 12 million retail outlets in the country, but large retail accounts for barely two percent of the total market, estimated to be worth about $200 billion a year.

But as India's economy expands, consumers have more money to spend. Supermarkets and shopping malls are beginning to dot the landscape, and the retail sector, growing by nearly 20 percent a year, is attracting the attention of both domestic and overseas companies.

For now, the sector is closed to direct foreign investment. But Arpita Mukherjee, of the Indian Council of Research on International Economic Relations, says foreigners are finding indirect ways of getting in.

"Large business houses have invested in this sector, even foreign players are entering this sector. They are entering through different routes like wholesale, cash-and-carry, franchising - manufacturers are moving into retailing. There is a lot of change," noted Mr. Mukherjee.

The change may become even more rapid if the government opens up the sector to outside investors - an issue currently being debated. Countries such as the United States are urging it to do so, and economists say India would benefit if foreign firms entered.

But the issue is politically sensitive, with the government's left-wing allies strongly opposing such a move. They fear that large, foreign chains like U.S.- based Wal-mart, with huge economies of scale, could force small companies out of business. Indian retail employs some 42 million people, second only to the agriculture sector.

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