The adverse effects of the ongoing slowdown have affected all the sectors of the Indian economy. Retail, FMCG, Information technology, Telecommunication, tourism etc, have witnessed terrible times in the recent days. The Oxford Dictionary defines Recession as ?a temporary decline in the economic activity or prosperity.? According to the dictionary of commerce ?Recession is a downturn in the economic activity, one phase of the business cycle. Decreased investment, falling consumption and increased unemployment are characteristics of this phase. Ironically, The NINJA (no income, no job and asset) crisis in the US can be reflected in a few words for the borrowers: ?My interest is not to pay the principle and my principle is not to pay the interest.? According to an ASSOCHAM Eco Pulse Study, India is among the worst affected emerging countries to have lost foreign exchange reserves as much as 3.5 per cent of its GDP due to currency imbalances in last four months triggered by global financial crisis, second only to Russia in BRIC nations. However, the Indian companies are not loosing their way. The re-evaluation and efficient implementation of strategies is helping the companies to sustain themselves. The following are some of the strategies which can aid in the tough times of recession:-
Cost management ? Most of the companies are undertaking measures to manage their costs. Unfortunately, most of the times these cost cutting measures leads to termination of employees and salary deductions which may ultimately lead to an inefficiency in operations. According to a recent report released by the labour bureau ?The effect of economic slowdown on Employment in India?, 5,89,020 people have been terminated from their jobs from October 2008 to January 2009.
The measures of cost cutting should be in a way that does not hamper the company'simage and at the same time leads to efficiency in the operations. Vishal megamart, a value retailer, has undertaken cost cutting measures which is helping the company to reduce its cost as well as to maintain efficiency. Vishal has already closed some of its larger warehouses and has opened a new centralised warehouse in Gurgaon. Future group, on the other hand, has clubbed its back office operations to reduce its cost. Managing the cost should be done in a way that does not affect the brand name of the company as well as contributes towards the efficiency in its operations.
Standout and innovate ? In the turbulent times of recession, the need of the hour is to do something that excites the customer and makes them think that the company cares for them. This can be done by standing out of the crowd and innovating. Mahindra Retail has come up with an innovative concept ?Mom and Me? which is targeting at the expecting women and their newly born babies. Similarly, Big Bazaar coming up with sabse saste 3 din reflects that the company cares for the customer and provides value for money to the customers.
Interpreting consumer behaviour? The companies should spent more in consumer research and should interpret what the customer wants. According to a KPMG survey attracting the customer and investing in the consumer research should be on the priority of the companies. This is a customer centric era and not a producer centric era. The companies should shift to value from lifestyle. The companies should offer more discounts, lower prices and should provide value added service to sustain in these times.
Rural gold mines ? The big giants like Reliance, ITC, HUL, Tata etc., have already realised that the there are gold mines in the rural areas which are yet to be tapped. The companies should look beyond the metropolitans and concentrate on these areas as well so as to generate more revenues and to have a sustainable competitive advantage.
The road ahead
Most arguably, India has witnessed the toughest time in the past few months. The impact of the slowdown has shattered the dreams of the ?Rise India? story. Most of the big giants have seen a sharp decline in their revenues and have faced complexity in attracting the customers. But as it is well said by Jon English ?You can lay down and die, or you can get up and fight, but that'sit ? there'sno turning back.? The India Inc. has taken the necessary initiatives to curb the effect of recession. They have restructured their strategies and are looking forward to retrieve their revenues and business. The series of actions taken by the India Inc. has shown an encouraging trend but when would the India Inc. come out of this chaotic phase is a question which most probably nobody can answer.
(The writer can be contacted at Faculty?Retail Management, Rai Business School, Espire Campus, A-41, MCIE, Mathura Road, New Delhi.)
Month-wise estimated job loss