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Effect of recession on retail

market

Team members

Syed

SundarBabu

John

Chaitanya

Digvijay

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Aim

To understand the impact of recession on retail

market

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Objective

To understand the reason for economy melt down

To understand the effect of recession on retail industry

To understand the various strategies used by retail

industry in order to overcome the effect of economic

meltdown

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What is recession

In economics, a recession is a business cycle

contraction, a general slowdown in economic

activity over a period of time

Recessions are generally believed to be

caused by a widespread drop in spending

Credit Crunch

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Businesses

Automobiles

Estates

Information technology

Retails (FMCG)

Textiles

Etc..

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Impact on retail

The inflation or the economic slowdown has adversely

affected the retail industry

Low marketing and advertising budgets

Challenge to get more customers at low cost

Communication channel ineffective due to high cost

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Evolution process of retail sector

Traditional retail outlet

Departmental stores

Malls

Multiplex, leisure centres

Larger malls

Pre1980s

Mid1980

1990s

2000s

2004-2005

Time

Market maturity

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Types of retails stores

Hypermarket

Supermarket

Convenience store

Department store

Discount store

Specialty store

Multi Brand outlets Malls

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Retail stores available in India

Types of retail formats in India

Mono/exclusive

branded retailshops

Multi brandedretail shops Convergenceretail outlets

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Factors that enhance retail growth in India

Retail unexploited and under penetrated.

Consumer spending increased sharply with huge proportion mainly from youth.

Strong income growth, changing lifestyles, and favourable demographic patterns.

Expanding cities outside their limits like tier 2, tier 3 cities and satellite townships.

Upgrading the airports which need retail outlets to be established in their premises.

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Indian Retail Industry during Recession

Decline in the growth rate of retail industry.

Expected growth of 16% in 2012 dropped to 10.4%[*]

Liquidity pressure on retailers due to

Low inventory turnover

High Operating cost

Increase in rental affected the profit margin.

[*] KPMG analysis and retailers association of India.

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Challenges ofRetail Industry

Location

Merchandise

Pricing Target Audience - "Consumer the prime mover

Scale of Operation

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Impact on Retail sector

Rapid credit sequence

High operating cost

Low consumer confidence

Lower inventory turnover

No best third party logistics industry

Fragmented supply base

Under developed supply chain and poor warehousing

facilities

Hike in real estate prices leads to increase in retail rentals

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Strategy to Overcome

Manage cost

Optimize technology usage

Efficient store management

Build competent supply chain management

Penetrate rural markets

Innovate

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Retail sectors in India by category

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