Retail Revolution Takes Hold in INDIA

Anuva Mehta, 40, shops at an air-conditioned supermarket in Gurgaon, India.

Pushing his cart through the gleaming, air-conditioned aisles of one of India's first supermarkets, Vikrant Mehta was relieved to buy his family's potatoes, mango chutney and hair oil "all under one roof."

While his wife cooed over the shiny tomatoes, Mehta said he didn't miss India's infamous open-air bazaars, with their buzzing flies, haggling peddlers and surging crowds. Even the friendships -- with the fruit seller who provided health advice, the bookseller who kept reading lists and the carpet man who offered loaners -- were, "frankly, a huge amount of pressure," he said.

"I'm not here to make friends. I'm just trying to shop," said Mehta, an executive with Air India. "Finally in India the customer is king."

Supermarkets and stores are on the rise in India, just one way in which this country's growing affluence is slowly changing its people's habits. Rising with the stores are megamalls, brightly lit and futuristic, that tower over the hundreds of fruit and vegetable vendors in New Delhi's booming suburbs of Noida and Gurgaon.

India has a growing middle class estimated at 300 million people. With a total population of 1.1 billion and economic growth rates of 8 percent a year, the country is emerging as one of the largest consumer markets in the world.

"There is a perceptible change in Indian retail that comes with our huge consumption boom," said Saurav Sanyal, a Gurgaon-based consultant with Carrefour, the French version of Wal-Mart. "As India changes in the coming years, people will increasingly be cash-rich, time-poor and may not find bargaining convenient. But this change will take years. I expect the modern and traditional formats will coexist for years to come. Yet the shakeout will come."

An estimated 80 percent of India's retail outlets are still neighborhood shops, consulting firms say. Still, there's a growing sense that mom-and-pop shopkeepers will eventually be nudged out by chains, which can buy cheaply in bulk. India's retail sector is expanding by more than $27 billion a year, according to the World Bank, and holds vast appeal for large corporations.

It's hard to imagine an India without mazes of noisy, crowded street shops filled with garlands of marigolds, bags of masala chips, statues of Hindu gods and red wedding bangles. In lively markets in cities across India, the humid air is thick with jasmine incense mixed with sweat. Punjabi pop music thumps as samosas fry, carpets are rolled out and glittery saris are unfurled, all while donkey carts and cows wander by.

Large chains may endanger the small-time vendors who work in such markets, but they also could imperil a deep-seated Indian ritual: bargaining. In a sign of what may come, Kolkata's famed neighborhood of booksellers, home to the largest market for secondhand books in Asia, is being moved by the city into a mall.

Many merchants also fear the chain stores may widen the gap between India's up-and-coming and those left behind. While the country is going through an economic renaissance, there is still grinding poverty, with 300 million people -- as many as are in the middle class -- living in heaving slums, without running water or electricity, often in the shadow of malls and five-star sushi restaurants.

Earlier this month, independent fruit and vegetable sellers rioted at Reliance Fresh, an Indian-owned chain of about 80 air-conditioned stores that carry groceries and convenience items. The company tightened security and announced it would open 1,500 more stores by 2009.

News that Wal-Mart and an Indian venture partner, Bharti Enterprises, are planning to spend $2.5 billion by 2015 to set up stores across India also sparked protests earlier this year, with demonstrators shouting, "Save small retailers !"

The crisis is already a reality for some small vendors. All over New Delhi, banners from the chain Subhiksha, which literally means "good bargain," advertise "Cheapest mangoes, best quality."

"We are the shop of the future," said Dheeresh Agnihotri, 24, who manages several of Subhiksha's 400 stores and who received an education stipend from the company, allowing him to go back to school for his MBA. "Soon all the little guys will want to work here."

Just down the road, a morose-looking Sharafat Hussein, 43, sat with his mango cart piled to the brim in the 105-degree heat. He's seen business drop by 40 percent. He had to pull his eldest son from school. He's gone into debt to pay for his mangoes. He can't afford to marry off his daughter. He sends half as much money to his aging parents.

"I get so sad when I see my customers getting in the car and coming back with bags of goods from the hypermarkets," he said, wiping the perspiration from around his eyes.

His one customer that afternoon, Pradep Hellan, a wedding photographer, said he doesn't want to drive out into India's version of urban sprawl or wait in lines at stores such as Subhiksha. He just rolled his car up to Hussein's carts, opened his wallet and bought his fruit.

"The little guy is just nicer, more Indian," he said.

Many Indians still enjoy the personal service and home delivery of their neighborhood vendors, often pillars in their community, extending credit to customers. Some also worry that shopping at huge stores, especially those stocked with Chinese-made goods, goes against not just their culture but also the father of the nation, Mohandas K. Gandhi, who preached that Indians should buy "homespuns," or locally made cloth.

But inside the MGF Mega City Mall, India's new class of mall rats harbored no such concerns. On a recent day, they could be seen downing thalis, or tiny bowls of rice, yogurt and cottage cheese, alongside greasy food from Pizza Hut. They flooded into Bollywood's No. 1 hit, "Ta Ra Rum Pum," along with "Spider-Man 3."

The luxury of being bored by the monotony of chain stores has apparently not yet occurred to most Indians. They relish the almost clinical shine and powerful air conditioning of malls, often repeating advertising slogans about "low costs, better quality and all under one roof," with cheerful optimism.

It is in the bookstores that the difference between the local shopkeeper and the chain stores could be felt.

Inside Spencer's Hyper Books and Beyond, instead of a wise bibliophile offering up dog-eared copies of Bengali literature and Islamic philosophy, there were teenage workers. They gathered around a computer, playing the profanity-laced hip-hop rhymes of Eminem. All the while, Indian families nearby blissfully thumbed through Disney storybooks.iration from around his eyes.

A Report by Emily Wax