Click to play videoMumbai: Falling sales had most lifestyle and upmarket retailers crying for help when the slowdown set in. But these problems are now old hat.
With the slowdown expected to hurt business for another 12 to 18 months, a KPMG report says over 60 per cent of Indian retailers are now struggling with huge debts and scarce credit.
“Working capital has become a major issue, especially for small retailers. Banks are not lending to them. This has affected their inventory levels, they are not able to pay their suppliers or buy further inventory,” head of consumer markets, KPMG Advisory Services, Ramesh Srinivas, said.
KPMG estimates a meager 8-12 per cent sales growth over the next 12-18 months. But operational costs could fall by 10 per cent due to lower rentals, manpower costs, and inventories.
And as loss-making stores down shutters, some bigger retailers may even go shopping.
“The larger brands and better retailers will see an opportunity if smaller ones go out of business. Perhaps, in terms of picking up assets and seeking even lower rentals,” Srinivas said.
Clearly, only the fittest will survive the slowdown but players are not panicking yet; there's optimism about the long term potential of the market.
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