Retail chains chained
The government's plan to prohibit big retailers from operating outside provincial capitals could hinder the development of marketing services, which are vital to the program of enhancing consumers' appreciation of domestic products. The plan, disclosed after the first cabinet session on poverty alleviation early last week, appears to be an emotional and unproportional, rather than rational and pragmatic, response to the concern for small businesses.
No one is denying the need to reserve particular areas of business for small enterprises to protect them from direct, fierce competition with the big players. But when it comes to marketing services, an outright, blanket ban on big retailers or retail chains to do business in regency towns could prove to be counterproductive. Such a measure runs against the market forces and trends. It also will deny small local retailers access to better retail technology and concepts, hinder retail development at the expense of domestic manufacturers and tax revenue for both the central and local administrations.
Compulsory partnerships, either through subcontracting arrangements for procurement or rental space in department stores and modern shopping centers to small firms, may be more effective in enhancing the development of small businesses. Such partnerships would facilitate the transfer of new technology and skills.
The format and concept of retailing need constant adjustments to the constantly changing ways of people's lives and needs, brought about by economic development and the dramatic progress in telecommunications. Small retailers, let alone ministores, obviously cannot afford to make the adjustments themselves.
Domestic retailers, to remain competitive and capable of attracting more customers, should always monitor demographic trends, changes in work patterns, lifestyles and shopping habits of consumers, and tailor their concepts and strategies to the new trends and changes. Retailing is a continuous process of adjusting the assortment of goods and prices to daily life and the purchasing power of a wide variety of consumers. For example, as land costs in major cities have risen far beyond the purchasing power of most salaried workers, housing complexes have tended to move to the suburbs and retail outlets obviously should follow to retain customers.
Because people's habits and needs reflect the income strata and individuals' educational levels, there is always a wide range of business opportunities for all kinds of retail formats, from the traditional, open wet market, roadside vendors and minimarts, to supermarkets and mega department stores. Hence, regencies or towns outside provincial capitals can accommodate big, medium and small retailers.
Totally closing regency towns to big retailers will not enhance the development of small retailers, especially if such a measure is not supplemented by training programs specially designed for small traders. Business partnerships are the most effective means of helping upgrade the skills of small retailers. Such a scheme would be sustainable in the long term because the relationships would be mutually beneficial.