FDI in Retail: A Global Perspective

Allowing FDI in multi brand retailing has recently generated tremendous euphoria for some and fear for others. It is based on the notion that it will open floodgates for foreign retailers to invest and will change the retail landscape forever in India. When India is the only country in the world where the top five business houses with market caps running into trillions are into retail business, this issue becomes much more interesting. Most retailers in other countries do not feature even in the top 10 large firms. Also the evidence of last 20 years of globalization by retailers shows that there is no such case of domination of foreign retailers wherever markets for global retailers have opened up. Only limited numbers of retailer have entered into these markets that too with lot of caution as they have realised that retail thrives on local knowledge rather than transplanting global retail concepts, strategy and formats. The experiences in other emerging economies have shown that fewer foreign retailers have been successful while several failed as they could not comprehend local nuances, customer insights and fight local competition. In fact, in many countries the local retailers have better market shares, sizes and performances.