Despite sales rebound retailers face uncertainty in slowing global economy

Mumbai: The world's 250 largest retailers recorded sales growth in excess of 5 per cent in fiscal year ended June 2010, according to the 2012 Global Powers of Retailing report from Deloitte Touche Tohmatsu Limited (DTTL), in conjunction with STORES Media.

The figures mark a substantial improvement on FY09, when the group of the top global retailers recorded anaemic growth of just 1.2 per cent. Significantly, growth in FY10 was achieved despite the end of fiscal stimulus in the United States, the crisis in the Eurozone, and tighter monetary policy in key emerging markets like India.

The Deloitte report states that retailers have learned to succeed in emerging markets like China and India as they significantly customise both their market models and product offerings to meet local needs and preferences. In addition, expect retailers to fully empower store and regional managers when developing marketing and sales plans, given the manager's better understanding of local consumer and community needs.

However, as the report states, the outlook for India is a bit cloudy as the economy is clearly slowing, following a period in which monetary policy was tightened to fight inflation.

However, although the monetary tightening resulted in slower economic growth, it did not bring inflation down. And because of this, policy makers are faced with the conundrum of slow growth with persistent inflation. As external trade is a modest share of GDP, Indian economy is relatively immune to the problems in the global economy.

As Rajan Divekar, senior director, Deloitte in India, says, ''The Indian retail sector offers significant potential for growth of modern trade but given the recent policy flip-flop related to FDI in multi-brand retail, both global retailers as well as existing Indian organised sector retailers appear to have adopted a cautious `wait and watch' approach before committing  fresh investments. Meanwhile, Indian retailers are customising and fine-tuning their business models across retail formats to ensure a balance between store expansion and profitability. The recent liberalisation permitting 100-per cent in single brand retail is a welcome sign especially for select luxury / niche retailers.''