India should fear 7-Eleven, not Walmart

As Prime Minister Manmohan Singh continues to struggle to push through reforms that would allow 51 percent foreign direct investment in multi-brand retail stores, opponents of the plan have tried to stir fears of a Walmart nation where superstores drive out small shopkeepers and slash jobs in the name of efficiency.

They're afraid of the wrong bogeyman.

Walmart, Tesco and Carrefour will necessarily have only a limited impact in India's congested cities and towns, where it can take more than an hour to drive five or six miles and few families have the storage space for a month-end "super shop."  Much easier to call across the street to the neighborhood "duccan wallah" (shopkeeper) and get him to send a delivery boy with what you need.  Which can be done, I might add, even if all you need is six sodas for splashing onto your Scotch.

So who should India's shopkeepers really fear?  7-Eleven.

The convenience store giant could penetrate right into the neighborhoods where the so-called kirana stores — i.e. mom and pop shops — could easily fight off a far-away superstore.  All you have to do is walk down the street in Bangkok, Tokyo, Singapore or Taipei to see the difference.  On many streets in Southeast Asia, there's literally a 7-Eleven on every other block, or outlets right across the street from one another so patrons don't have to wait for the light (OK, nobody in India waits for the light, but you get the idea).

Would that be great for the consumer?  Maybe.  I've been known to enjoy a sushi roll from 7-Eleven in Taipei or Bangkok now and then.  And amid all the talk about whether or not Walmart will help India build the so-called "cold chains" needed to reduce losses in transporting veggies from farm to fork, nobody should underemphasize the importance of cold beer.

It might also bear remembering that this is exactly the same debate India went through when it decided to open its automobile market to foreign competition.  And while it's true that the two market leaders — Maruti-Suzuki and Hyundai — are foreign or majority foreign, opening up also made Tata Motors step up its game to become an international-level player.  Eventually, it even bought Rover Jaguar (which may or may not turn out to have been a good move).