Has recession affected the kerala retail market?
This is a question I have been asked by several people during the past several months. Its interesting to notice the changes that is happening in the kerala retail market at present.
Just like most of us, one year back, the word recession was not there in average Keralite’s vocabulary. The kerala retail market was booming like never before. Consumers were busy spending their bucks on anything they can lay their hands on. Even after India Inc. declared that it was also facing the economic downturn, people of Kerala seemed oblivious of the situation. The scene suddenly changed with the news of Gulf NRIs returning to their home state (the fact still remains debatable). The consumer state slowly started slowing down their spending and meanwhile the retailers in the local market found their funds being dried up - banks tightening their lending to businesses on one hand and business slowing down drastically on the other hand. Panic started creeping into the local retail market and especially the downfall of the real estate sector made the scenario worse.
Out of all these chaos there was some interesting consumer movements in the small town retail markets. People started to cut down their purchase budgets, be it a wedding purchase or a festive purchase, by localizing their purchases. Earlier an average consumer in the state found pride in taking a huge bandwagon of their friends and families to big retail showroom located in nearby and even far away cities. Consumers who once boasted of their purchases being made in big retail showrooms in the cities flocked to their nearby retail showrooms in the local markets. This helped them to cut down the cost of such purchase expeditions.
End Result?
On one side its an alarming situation for the big retailers in the cities and on the other side it’s a windfall for the small retailers in local markets. Again there is another interesting aspect in these local markets. The consumer who earlier used to visit one big retail shop in the city for all his needs now scouts through different retail shops, be it a textile shop or a supermarket, in the local markets to satisfy their needs. This resulted in a situation where the business is being split up between several shops and only those who have the capacity to keep their stocks live can handle this jump in business. Meanwhile here is a huge spurt in new store launches in most of the smaller towns (On one single auspicious day (August 17th) there were more than 10 showroom inaugurations in and around Thrissur which is one of the cities in Kerala). The reverse flow of business to smaller towns has created bigger retail showrooms in such local markets and this again undermines the small retailers in the smaller towns.
It would be interesting to see how the market responds now once the recession panic is out of the minds of the average consumer. Will the biggies be able to pull back their customers, is it the smaller towns which are going to retain this new customer or is it an entirely new breed of small town biggies that is going to emerge? It’s a catch 22 situation.
Just like most of us, one year back, the word recession was not there in average Keralite’s vocabulary. The kerala retail market was booming like never before. Consumers were busy spending their bucks on anything they can lay their hands on. Even after India Inc. declared that it was also facing the economic downturn, people of Kerala seemed oblivious of the situation. The scene suddenly changed with the news of Gulf NRIs returning to their home state (the fact still remains debatable). The consumer state slowly started slowing down their spending and meanwhile the retailers in the local market found their funds being dried up - banks tightening their lending to businesses on one hand and business slowing down drastically on the other hand. Panic started creeping into the local retail market and especially the downfall of the real estate sector made the scenario worse.
Out of all these chaos there was some interesting consumer movements in the small town retail markets. People started to cut down their purchase budgets, be it a wedding purchase or a festive purchase, by localizing their purchases. Earlier an average consumer in the state found pride in taking a huge bandwagon of their friends and families to big retail showroom located in nearby and even far away cities. Consumers who once boasted of their purchases being made in big retail showrooms in the cities flocked to their nearby retail showrooms in the local markets. This helped them to cut down the cost of such purchase expeditions.
End Result?
On one side its an alarming situation for the big retailers in the cities and on the other side it’s a windfall for the small retailers in local markets. Again there is another interesting aspect in these local markets. The consumer who earlier used to visit one big retail shop in the city for all his needs now scouts through different retail shops, be it a textile shop or a supermarket, in the local markets to satisfy their needs. This resulted in a situation where the business is being split up between several shops and only those who have the capacity to keep their stocks live can handle this jump in business. Meanwhile here is a huge spurt in new store launches in most of the smaller towns (On one single auspicious day (August 17th) there were more than 10 showroom inaugurations in and around Thrissur which is one of the cities in Kerala). The reverse flow of business to smaller towns has created bigger retail showrooms in such local markets and this again undermines the small retailers in the smaller towns.
It would be interesting to see how the market responds now once the recession panic is out of the minds of the average consumer. Will the biggies be able to pull back their customers, is it the smaller towns which are going to retain this new customer or is it an entirely new breed of small town biggies that is going to emerge? It’s a catch 22 situation.
