Invest in consumer research to make the most

In recessionary times like these, it is wise for companies’ to invest in CRM and consumer research to know what the customer really wants. No doubt the prime focus would still be to attract maximum number of people to the store, but one cannot take customers for granted. In order to induce them to actually buy, it is advisable to sell the right product at the right price.

A recent report on retail realised by consultancy firm KPMG states that the current slowdown is expected to last 12 – 18 months. Discretionary spend has taken a beating and people are spending on the basic necessities. As it is evident from the sales breakup of the large retailers, value retail is paving way for lifestyle goods. Food retailing and FMCG would be the trendsetters for the coming season. In fact private label will be the leader, be it food or grocery or apparel as margins in these are very high. Private label penetration for emerging markets continues to be at 6% as against Europe’s 23% which has the highest penetration. This is precisely the reason why private label is growing the fastest (at 17%) in these emerging markets. Back home, Trent has the highest share of private label at 90%. Retailers have been offering discounts to liquidate slow moving goods and reduce inventory.

However all hope is still not lost. Attractiveness of India’s demographic and economic environment will continue to add momentum and the future prospects for retail expansion are still very attractive. Infact this period of uncertainty is seen as an important consolidation imperative for the industry.

Source: Images Retail report,2009