Friday, June 01, 2012: 07:07:55 PM

Retail Trend

Impact of strikes on retail sector

Being highly sensitive to fluctuations, even a day off from business can be harmful for the small retailer

Retail is the only industry that interacts directly, most regularly and most intensely with the end-consumer. It therefore forms the point of contact between all other businesses involved in production and the final user of the products. A day when the retail industry is unable to conduct business, losses permeate every aspect of the industry.

 
For a nation as dynamic and rapidly growing as India, the retail sector is an excellent indicator monitoring the market sentiments and the economic mood of the common man. Consumption patterns and production issues can also be traced through the performance of the retail sector. Therefore, for a sector so sensitive and critical to the nation’s economy, a day closed for business is a lot of money lost. While strikes may have relevant political reasons, retailers end up incurring huge losses in the process.
 
According to Rakshpal Abrol, consumer activist and chairman of the Bharatiya Udhami Avam Upbhokta Sangh, “There have been nationwide strikes time and again and sometimes we have supported and sometimes we have opposed. No matter which side the retailers are, the losses are faced by them. The matter is also of a lot of inconvenience for the common man who is dependent on the retailer for everyday matters.”
 
The impact is highest on smaller retailers for whom closing a shop on a weekday could mean a significant percentage of loss and wastage, given their slim profit margins. In this context, Lilavati Gupta, proprietor of Gupta Food Products, a small-sized food products supplier and seller in Varanasi, said, “Each time there is a strike in the country, small retailers like us pay the highest price. Not only are our businesses closed but we are also faced with the tough challenge of protecting the perishables goods..”
 
Negotiating the tough market
 
Though the trend of strikes is more common in a few selected states of India, nationwide strikes are also not a complete rarity. Though in some strikes retailers are known to be supportive, the ones involving political factors are often harmful for the industry. Recently the sector was seen protesting the hikes in the excise duty on jewellery and earlier the textile sector too was seen objecting to a similar hike by the government. Oil retailers have been in the limelight for quite a while now but none of them can be categorised in the small-scale sector and the sector also gets heavy subsidisation from the government.
 
It is also crucial to understand that the retail sector faces the brunt of the high inflation rates without witnessing any significant change in margins themselves. Though most customers are aware of the fact that the price rise happens due to factors beyond the control of their convenient store, some customers complain of the hikes and several alter their consumption patterns. For smaller retailers, the market is even tougher to negotiate in hard times because of the extremely high level of competition. A forced day off from business for these players can therefore be quite devastating.
 
Tias Chakraborty

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