I had thought of writing an article about this just about a week ago. Now that I am writing it I have even more data supporting my hypothesis.
The weekly jobs data from the US.
Erie feeling about the markets all around. Why does this look exactly like the recession which we have supposedly overcome? Why, despite every single data point suggesting a slowly moving economy, is the market higher? If quantitative easing does indeed happen (I dont know if one can take the interest rates below 0) how is that a good signal for any company when you know no one is going to be out buying?
The stock markets tend to exaggerate the good news and down play the bad ones consistently, over only when the bad news could actually be devastating.
Up until last week my reasons could have been biased because of my expectations of a correction because of my positions in the market. This week I have already booked losses in my positions and yet the feeling has only gotten stronger.
Just some preliminary thoughts to get a discussion started. I have my research partly ready will work on it and publish it later in the week. (busy with some work and studies) Scary as it may sound I think we are headed for a recession again. (by we i mean the US in particular a global slow down in general)
Gopal Balakrishnan
Friday, October 8, 2010
Friday, April 2, 2010
Small Retailer Part III - Stop asking questions??
20th March 2010
Set out on my agenda to unveil the competitiveness and effectiveness of the small retailer, I have tried very hard to get information from more than 7 shops till date and have hit a road block on each of those occasions.
First attempt:
I told the retail shop man on the counter that I was doing a study on how the small retailer works and how difficult it has been for him to set up shop. I told him I was doing this as a college project for my course and asked him if he could spare me some time. What ensued was a very very agitated and almost fear stuck man telling me he has no time, telling me that "hum yeh sab nahi karte" (we don't do such things).
I thought that he probably misunderstood me in someway, because I couldn't imagine why he was so agitated. I reiterated that I was only conducting a survey and there wasn't anything else to it. He refused to answer any more questions. In order to make myself more acceptable to him I stepped away from the counter and bought a bottle of fruit juice. And while I was paying the money I thanked him for his time to put him at ease.
On my way back home I was perplexed by what I had just witnessed. I thought that may be I had spooked him because of something I said, or perhaps he was in the wrong.
The next day with renewed enthusiasm I moved to the next shop on my list and to my surprise and dismay I was met with a similar kind of reception.
The third shop I went to, I made an attempt to cozy up with the owner by first purchasing something and initiated a conversation. I had a whole new story in place about how I was making a video on the "aam aadmi" (the common man) and his contributions to India's growth. The story would talk about how tough these guys have it and yet they make India proud. At the money counter, I asked him if he could spare me some time and started the story and you guessed right, I was a stranger once again, a very dangerous one at that, for some reason that was still beyond me.
Ok, I was getting nowhere with a simple task and that was getting weirdly fascinating. I sought to answer a question and was presented with another puzzle. I began to think why was I being rejected so bluntly and so vehemently?
I can only speculate but these are a few reasons I think could be at play here.
1. Small retailers live on wafer thin margins, they virtually make a living because of the bigger distributors, they are almost like paid employees to the distributors. They fear giving out any data that might bring them into the limelight and may cause discomfort to their distributors. They also fear that some of their illegal practices like charging an extra buck for a soft drink bottle may also get highlighted and may make them lose their only source of livelihood.
2. Tax evasion is widely prevalent amongst such small businesses who have seen many of their high flying cousins in the small retail industry either tie up and grow along the corporate ladder as employees of the enormous bazaars and the moon bazaars or fall prey to the tax raid. If you are doing something illegal its best not to get noticed.
3. Entry barrier to the retail industry is very very weak. A single distributor provides all the goods for each and every shop on a block. The distributor has no problem adding one more shop in the same street. There are no bonds or contracts between the retail shop owner and the distributor about restricting competition. So the retail owners may have perceived me as potential competition too.
In my complete endeavour I tried to interview 8 shops and got simple answers only from one and varying degrees of hostility from the others.
Simple questions often uncover answers to difficult questions while still remaining unanswered themselves.
Gopal Balakrishnan
Set out on my agenda to unveil the competitiveness and effectiveness of the small retailer, I have tried very hard to get information from more than 7 shops till date and have hit a road block on each of those occasions.
First attempt:
I told the retail shop man on the counter that I was doing a study on how the small retailer works and how difficult it has been for him to set up shop. I told him I was doing this as a college project for my course and asked him if he could spare me some time. What ensued was a very very agitated and almost fear stuck man telling me he has no time, telling me that "hum yeh sab nahi karte" (we don't do such things).
I thought that he probably misunderstood me in someway, because I couldn't imagine why he was so agitated. I reiterated that I was only conducting a survey and there wasn't anything else to it. He refused to answer any more questions. In order to make myself more acceptable to him I stepped away from the counter and bought a bottle of fruit juice. And while I was paying the money I thanked him for his time to put him at ease.
On my way back home I was perplexed by what I had just witnessed. I thought that may be I had spooked him because of something I said, or perhaps he was in the wrong.
The next day with renewed enthusiasm I moved to the next shop on my list and to my surprise and dismay I was met with a similar kind of reception.
The third shop I went to, I made an attempt to cozy up with the owner by first purchasing something and initiated a conversation. I had a whole new story in place about how I was making a video on the "aam aadmi" (the common man) and his contributions to India's growth. The story would talk about how tough these guys have it and yet they make India proud. At the money counter, I asked him if he could spare me some time and started the story and you guessed right, I was a stranger once again, a very dangerous one at that, for some reason that was still beyond me.
Ok, I was getting nowhere with a simple task and that was getting weirdly fascinating. I sought to answer a question and was presented with another puzzle. I began to think why was I being rejected so bluntly and so vehemently?
I can only speculate but these are a few reasons I think could be at play here.
1. Small retailers live on wafer thin margins, they virtually make a living because of the bigger distributors, they are almost like paid employees to the distributors. They fear giving out any data that might bring them into the limelight and may cause discomfort to their distributors. They also fear that some of their illegal practices like charging an extra buck for a soft drink bottle may also get highlighted and may make them lose their only source of livelihood.
2. Tax evasion is widely prevalent amongst such small businesses who have seen many of their high flying cousins in the small retail industry either tie up and grow along the corporate ladder as employees of the enormous bazaars and the moon bazaars or fall prey to the tax raid. If you are doing something illegal its best not to get noticed.
3. Entry barrier to the retail industry is very very weak. A single distributor provides all the goods for each and every shop on a block. The distributor has no problem adding one more shop in the same street. There are no bonds or contracts between the retail shop owner and the distributor about restricting competition. So the retail owners may have perceived me as potential competition too.
In my complete endeavour I tried to interview 8 shops and got simple answers only from one and varying degrees of hostility from the others.
Simple questions often uncover answers to difficult questions while still remaining unanswered themselves.
Gopal Balakrishnan
Of Banks and People
24th Feb 2010
I just saw this on CNBC TV18 that if you have been harassed by a bank about a mistake that they have committed, if you have had to work and persist with an issue and waste your time to rectify THEIR mistake then it is not enough for them to just rectify it they have committed with the RBI banking ombudsman that they will pay compensation.
Why is this great?
When we delay some payment by even a day we are charged a fine which more than wipes out the interest. Even a simple debit card cost Rs. 200 to replace. Even our online transactions of our own money that they use to make theirs is now going to be charged. When faced with all this why shouldn’t we charge them when they make a mistake, when their entire business is about money its NOT acceptable when they make mistakes with ours.
Gopal Balakrishnan
I just saw this on CNBC TV18 that if you have been harassed by a bank about a mistake that they have committed, if you have had to work and persist with an issue and waste your time to rectify THEIR mistake then it is not enough for them to just rectify it they have committed with the RBI banking ombudsman that they will pay compensation.
Why is this great?
When we delay some payment by even a day we are charged a fine which more than wipes out the interest. Even a simple debit card cost Rs. 200 to replace. Even our online transactions of our own money that they use to make theirs is now going to be charged. When faced with all this why shouldn’t we charge them when they make a mistake, when their entire business is about money its NOT acceptable when they make mistakes with ours.
Gopal Balakrishnan
Small Retailer Part II - To the naked eye
17th Jan 2010
Setting off on this quest with a set of observations and assumptions to begin with and verifying them with the whole array of small retailers that I am surrounded by. I shall post a video of the answers I get. We shall set a premise for our research.
The most interesting and challenging aspect of this project is going to be winning the trust of the retailer. I do not believe getting access to their sales and distributors numbers is going to be an easy task at all.
The camera and the genuineness of my endeavour and the upside that numbers can help them will perhaps be a selling point but cannot be sure.
Day one I will look to cover the 15 or so retailers in lane on which I live.
Gopal Balakrishnan
Setting off on this quest with a set of observations and assumptions to begin with and verifying them with the whole array of small retailers that I am surrounded by. I shall post a video of the answers I get. We shall set a premise for our research.
The most interesting and challenging aspect of this project is going to be winning the trust of the retailer. I do not believe getting access to their sales and distributors numbers is going to be an easy task at all.
The camera and the genuineness of my endeavour and the upside that numbers can help them will perhaps be a selling point but cannot be sure.
Day one I will look to cover the 15 or so retailers in lane on which I live.
Gopal Balakrishnan
The Small Retailer : Intro
14th Nov 2009
Let me dive right into one of the things this blog is supposed to be about instead of explaining what this blog is supposed to be about.
I have been fascinated with the workings of the tons of retail shops that flood nearly every street of every town in India. May be the villages are a bit different where you have a centralized location for some market and consumer activity.
So why does every road we tread have a shop selling confectioneries candies, biscuits and ALMOST every road has a "general stores" by that I mean shops which sell soaps and other household objects.
The first part of the question can be easily dismissed as a euphemism. Instead of asking why does every street have a cigarette shop (yes middle class Indians and well to do Indians still view smoking as an evil not simply as a bad habit) but that’s for another day another analysis.
How do we account for the 2nd one?
Why do we have so many general stores?
How much do they really make with such competition?
And we seldom if not never see one of them offering anything different from the other. So how do such stores continue to live and sometimes thrive in the face of such competition?
With no difference in product quality or service quality? (most cases)
As I go about unraveling this I will introduce a lot of numbers and facts which are not readily or easily available in the Indian context. Well I hope to at least :)
Gopal Balakrishnan
Let me dive right into one of the things this blog is supposed to be about instead of explaining what this blog is supposed to be about.
I have been fascinated with the workings of the tons of retail shops that flood nearly every street of every town in India. May be the villages are a bit different where you have a centralized location for some market and consumer activity.
So why does every road we tread have a shop selling confectioneries candies, biscuits and ALMOST every road has a "general stores" by that I mean shops which sell soaps and other household objects.
The first part of the question can be easily dismissed as a euphemism. Instead of asking why does every street have a cigarette shop (yes middle class Indians and well to do Indians still view smoking as an evil not simply as a bad habit) but that’s for another day another analysis.
How do we account for the 2nd one?
Why do we have so many general stores?
How much do they really make with such competition?
And we seldom if not never see one of them offering anything different from the other. So how do such stores continue to live and sometimes thrive in the face of such competition?
With no difference in product quality or service quality? (most cases)
As I go about unraveling this I will introduce a lot of numbers and facts which are not readily or easily available in the Indian context. Well I hope to at least :)
Gopal Balakrishnan
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