The Global retail sector is headed for a slowdown with economic recession becoming a reality in many economies of the world. Retailers world over will need to adapt their strategies in response to the same. Moreover, the maturing of many markets and the aging of consumers in many economies has also triggered retailers to rethink their strategies. At the same time, the emerging markets of China and India have begun a rebalancing of the global economy that will have a huge impact on the global market.
The significance of retail in the World economy can be gauged from the fact that the largest corporation in the world – Wal-Mart is a retail chain.
The significance of retail is apparent not only from its contribution to various economies but also by the level of employment generated by the industry. In India, where organized retail is just beginning to make its presence felt, it already contributes close to 6 – 7% of the employment. In the developed markets, organized retail controls a significantly higher portion of trade as compared to that in a country like India. Food and grocery constitutes the largest segment of retailing and also forms a significant part of the trade of the key global retailers.
The world of retail is a fast changing one and calls for constant evolution on the part of the retailer. A retailer not only needs to keep up with the ever changing expectations and demands of the consumers but also needs to keep track of the competition, the changes in technology and the socio economic climate of the nation that he is operating in.
As stated earlier, till a few years ago, the American economy fuelled economic growth in many parts of the world, but an economic slow down has forced many retailers to start looking at other economies. Rising fuel prices have also had a negative effect on the rapid expansion of the trade in various parts of the world. Retail at a global level, is a reality, which has to be understood and faced by retailers. Globalization is gradually emerging as an integral part of the retail strategy of many retailers. Listed below are some of the key challenges being faced by Retailers world wide.
The emergence of new markets: Asia, especially China and India are the emerging market places. In the past, the sheer size of China and India did not necessarily lead to their having an impact as a market. The technological, transportation and industrial revolutions of the past two decades have changed much of that. Increasing urbanization in both the markets has fast emerged as an important factor in the rise of these nations as important emerging markets. Together China and India, or Chindia as they are now termed, are estimated to see the GUDP rise $% 6 trillion by the year 2020. They will consume 45-50% of the world’s natural resources and have the potential of becoming the world’s largest exporters of goods and services with a 25% + share. Few marketers and retailers can hence, ignore such a market.
The Empowered Consumer:
Retaining the consumer is far more difficult today than it was a decade ago. Consumer lifestyles and demographics are changing rapidly. Spending power is increasing and technology is aiding consumers to make sound shopping decisions. Given the increased amount of choice in terms of products and formats, consumers now demand more for less from the shopping experience: more quality, choice, consistency, convenience and service, for less money, time, effort and risk. Competition is not just on price, but on multiple fronts.
Technology Enabled Efficiencies:
Technology has enabled businesses and consumers to build efficiencies on the basis of the ability to receive and transmit data at a fast speed. This information has today become critical for achieving efficiencies in all aspects of retailing. In the near future, retailer supplier partnership will depend on technology, substituting information for inventory in the pipeline to reduce costs while improving productivity. Retailers will rely on technology to establish links with consumers through electronic retailing and customer relationship marketing.