Impact of Hypermarkets

Retailing is defined as the process of selling goods to consumer through some channel of distribution, with the aim of making a profit . A retail store primarily acts as an intermediary between a wholesaler and the consumer. Wholesalers,on the other hand is one step ahead of the supply chain. They control the supply and procurement of the product directly from the manufacturer.

When you mention the word retail shop, it always used to refer a kirana store selling groceries or a store inside a mall, selling various items like electronics or clothes. These small brick and mortar stores had a loyal following and customers preferred to buy from them, primarily because of familiarity. The shopkeepers had a constant rapport with each of their customers and knew exactly what they wanted and what they didn’t. Even in cases where a customer wasn’t able to pay him immediately, they allowed a credit system to pay them at the end of the month

Then came the huge corporate firms, who decided to launch hypermarkets in all cities, which was basically an all in one store. It was a gigantic store selling everything including groceries,household items, clothing, electronics and even food. It was rather a culmination of several supermarkets and departmental store in a single place

The concept of Hypermarket was initially started by Sam Walton, who opened the first “Wal-Mart” across the United States and has only grown several folds since
Acting as a one stop shop for all your needs, it offered deep discounts on all products and ensured you had a lot of savings at the end of the month. It was something like “More you Buy, More you Save”, quite the opposite of concept of economics. Naturally every new concept has its own positive and negative impact, on the economy as well as its citizens. 
Below are some of the positive impacts of Hypermarket
  • When people end up purchasing items required for the household for a month, it results in huge savings, thanks to the huge discounts
  • Hypermarket stores require a huge supply of manpower and labour. The opening of hypermarkets across the country, even in Tier II,III cities has created thousands of jobs. These jobs range from construction workers, sales persons, supervisors, managers, data analysts and even engineers who  needs to build robust IT systems to manage the data
  • Getting everything in the same store, results in considerable time savings.
  • Breaking the traditional supply chain distribution system, manufacturers are able to sell directly to these hypermarkets. This results in lower inventory costs, shipping costs and increased profits
Negative impacts of Hypermarket
  • The local Mom&Pop stores are affected very badly. They are literally crushed by the hypermarkets, in terms of variety, availability and the price. Small retailers can never match the price given by hypermarkets
  • The personal attention, familiarity and confidence given by local retailers can never be given by a hypermarket.
  • Brand loyalties of customers are impacted, thanks to a wide scale availability of similar brands
  • Monopoly of retail by these hypermarkets tend to have a negative impact on the retail industry as a whole

This blog post is inspired by the blogging marathon hosted on IndiBlogger for the launch of the #Fantastico Zica from Tata Motors. You can  apply for a test drive of the hatchback Zica today.

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