Impact of Global Recession on Indian Retail Sector

Abstract

Today India is transforming from a socialist economy to a consumption led creative economy. The scope and depth of change that is taking place across India defies description. This change provides both a big challenge and a gigantic opportunity for marketers and retailers. India is the fast becoming the retail heaven of the world. Retail in India is accounting for over 10% of G.D.P and 8% of employment. There are over 15 million retail outlets in India and 80% of these are small family businesses. The striking feature of Indian retail is duality – presence of modern and traditional retail. Small traders comprised of traditional retail have 96% share of retail sector and 4% share is occupied by modern retail. Corporate retailers however have plan to augment the share of modern retail from 4% to 15%-20% in next 4 years by investing more than $25 billion .The retail market in India is anticipated to grow to 427 billion U.S.D by the year 2010. But due to global recession RETAIL confidence has plunged to a five-year low, in a sign the key sector might slip into a recession. Rising inflation and slower consumer spending, the main engine of economic growth had devoured profit margins and sales were also expected to fall. The retail sector has started tumbling. The manufacturing sector has sustained a severe hit. The tourism sector has been affected, too. Hotels have already reported 20-25 % cancellation from international tourists who were booked to visit over the next one year. The reduced purchasing power of Indian consumers in the current situation has revved up competition among shopping malls. They now have to step up their ad spend along with discounts to lure consumers who have restricted their shopping list to essentials, such as food and other consumables. But recession has been a roller coaster ride, which we don’t know when it all will end. With each passing day, the ride seems to be getting more complex and clueless. However, the good part is, if there really is any, that we are not alone in this. The impact has been really hard and most of the industries under the sun are equally impacted by it. While we have read and heard about the various challenges that a recessionary economy presents, we should also look into the various opportunities that this recession has presented to us.

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