Recently there was some discussion online about the so-called “politics of organized retailing” in India (on Retailwire).

I believe these are no different from the politics of anything else. There are interest-groups and pressure-groups with different objectives, who pull-and-push economic and regulatory policy with varying degrees of success. In that, India is no different from any other country, whether the US or China.

After China began opening up its economy in 1979, it took more than a decade for it to begin allowing foreign retailers to enter the market, and it was not before domestic retailers were given time to scale up.

Even in the US of current times, there are places where the community would be up in arms at the slightest whiff of a Wal-Mart store proposal.

Even in the UK, the Competition Commission is preparing a report on how retail consolidation is affecting the sector and the consumer.

So the answer to the question about “the politics of organized retail” is: yes, there is politics involved, and if you are an interested party then there is no option but to be part of the politics.

While on the issue about opportunities in the Indian market, I’m reminded of a couple of conversations, one with a client and another with an associate, who compared the Indian market to the US and the UK, respectively, in the 1970s.

My response to them, and to the question above, is: yes, there is tremendous opportunity in India now, as there was in those markets in the 1970s. Yes, in parts the market, the distribution structure etc. may remind you of the US and the UK in the 1970s. But to assume that it will play out the same way would be dangerous.

There are many other cultural, economic and social factors, apart from the infrastructure, to take into account.

My advice to international brands and retailers is as always: approach India as India in the 2008, don’t approach it as the US in the 1970s. Or as China, Brazil or Mexico.

Some pointers that may be interesting: “Slicing the Market” and other articles available elsewhere on the Third Eyesight website.

Many pundits have passed judgement on the inevitability of ‘organised retail’. Yet, around the world, independents continue to thrive.

One may think that at least in difficult economic phases – such as the one facing economies around the world right now – large retailers are better equipped to survive. Yet, often it is the flexibility of the owner-driven small business that rides out the trough. Service levels and personalisation – that are increasingly critical in an impersonal world – are often far better delivered by a small retailer. [See “Playing with the Big Boys”]

And when it comes to business across borders, I can’t think of any retailer that is truly global. Most retailers that have successfully run international businesses in multiple countries (Carrefour, increasingly Tesco and others) have had to localise significantly – often sacrificing scale to achieve localisation.

A well-written article by Paul Chapman in Mint (February 18, 2007) raises some of these points using India as an illustration. Worth a read: The Rocky Route to Modern Retail.

Creating an entrepreneurial ecosystem is absolutely critical to a healthy and vigorous society and economy.

Creating a “democratic” entrepreneurial ecosystem is even more critical to sustaining that health. A democratic entrepreneurial system is like all other democracies – inclusive and widespread – and vital to improving the baseline quality of life.

As we’ve pointed out elsewhere, retailing is not just a fundamentally entrepreneurial business, it also offers up a platform for the birth and growth of other entrepreneurial businesses.

Obviously, big retailers offer a change for companies to scale up faster, once they meet the performance criteria set by the retailers.

The interesting thing is that small retailers offer an even more interesting growth opportunity since, as their own business grows, they grow their supply partners as well.

Countless companies and brands have been launched on the back of the likes of Wal-Mart, Carrefour, Tesco, Marks & Spencer, and in India retailers such as Pantaloon’s and Spencer’s (and even some of the early modern retailers in India that don’t exist anymore).

In view of this, it is wonderful to see 2-9 February 2008 being celebrated as Entrepreneurship Week (on the National Entrepreneurship Network’s website) and also its powerfully worded pledge.