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Business after recession

Written by: Rahul Jain

Article Overview: This article describes the strategies to be adapted by the business manager/owner to tackle the recession in an effective manner.

Business after recession

The word "Recession" is the buzzword around the globe these days and has become the most famous word. As I can't say that it has become the most famous "brand". Recession means slowdown in growth or may be no growth at all. There is a positive side too; now companies are becoming more focused, realizing the value of managing costs and taking action to improve the customer loyalty and Brand image. Moreover despite the global economic slowdown, Indian retailers are hopeful of India growth story. As per Mr Tarun Joshi, CEO and MD of Brandhouse Retails said "Fashion retail has not been impacted in a big way. Not even 0.5 per cent of the working population has been hit in India." "The Indian economy is more stable than other economies across the world and one must not confuse India with the rest of the world", reiterated Mr Sandeep Kulhalli, V-P, Retail and Marketing, Tanishq. I would be discussing certain measures which a fashion organization can take to tackle recession in an effective manner. First measure that the fashion organizations should take is to have greater focus on their core competences. This means that organizations should focus their efforts on those activities which they do well and outsource non-core activities. This will give twin benefits of improving quality and reducing costs.

Another measure which I will suggest is to manage the costs in an effective manner. Let me discuss the case of Future group here. As per the economic times, "It is the only Indian retailer that has managed to grow sales by 25%. Its operating margin crossed the 10%-mark, up 1.4% year-on-year, while manpower and operating costs fell 1.33% and 1.78%, respectively." This was possible due to their early start of cost cutting efforts. For this they outsourced the non core functions like I/T and started optimizing the costs. Moreover its rentals are less than the other players. I will give another example, but of a Non -Fashion company. Infosys, In an internal communication sent to employees, Infosys CEO Kris Gopalakrishnan "has urged the employees as the stake holders in the company to help in cutting the operating cost and controlling expenditure." For this the company has created a website and is seeking suggestions and ideas from the employees. Up till not the company has already received 1000 plus ideas.

Last thing which I will suggest is to do the customer profiling. This is the right time to utilize the spare time for building tighter bond with the consumers. Fashion companies should consider the different sub-groups of customers they have and how they differ in terms of types of purchase, cost of purchases, servicing needs, communication methods, total purchase transaction time, post-purchase needs, complaint issues, and others. This will help in profiling. Profiling helps in understanding everything from how to best service the customer to delineating the best methods for marketing, selling, and retaining these customers. The rule of the thumb is to never assume anything about your customers.

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Article Tags: Business, Profits, Recession, Strategy



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The Hidden Hand Effecting Your Bottom Line - If you are based outside the U.S and run an online business, you'll probably receive a lot of your payments in U.S dollars. When the recession hit I saw a lot of non-U.S business people boasting how they [u:20bfadx5]hadn't been effected by the recession[/u:20bfadx5], brushing off the recession as something that was not important. But they [u:20bfadx5]overlooked the hidden hand[/u:20bfadx5] effecting their profits. The currency markets which for non-U.S businesses paid in U.S dollars has masked the effect of the recession somewhat, and has an incredible effect on your overall profits. Looking at my profits over the past several months I can see fluctuations up and down. I may have a hard time attributing what is causing these fluctuations if I believed the recession didn't effect me because overall my earnings and traffic are up. But then I compare to the U.S - ££ exchange rate, and notice a [u:20bfadx5]strong correlation[/u:20bfadx5] with my profits. When the dollar is strong my profits are higher, and when it is weak they are weaker. It didn't account for all fluctuations but the effect was very strong. I know most people are aware that exchange rates effect their business, but I don't think people realize how strongly it's effects can be, and how closely related to the economy this is. So to say "the recession didn't effect me" because your profits went up can be [u:20bfadx5]very wrong[/u:20bfadx5]. The hidden hand of exchange rates could have improved your profits, and the exchange rates changed due to changes in the economy, i.e the recession. The recession has caused this fluctuation in exchange rate as people fled from the stock market into cash, and with the $$ being the biggest currency in the world, more people fled into the dollar, pushing up its value against other currencies. When the stock market bounced in March and people moved back into stocks and other investments, the dollar weakened. In addition I did see a overall drop in advertiser spend which wasn't just attributed to the dollar weakening after March. I attribute this to advertisers cutting back their budget in response to the economy, but given a change in mood and outlook in recent months this is now reversing and advertiser income is up despite a weaker dollar. So the recession has played a bigger role in my business than at first glance, so just because profits are up does not mean my business is not being thrown around by external economic factors. For this reason I've studied the economy, made a prediction on what is most likely to happen based on trusted sources with the strongest track record, and made a plan for that eventuality, and then also plans for less likely scenarios, so that my business can prosper in either situation. Instead of overlooking this hidden hand it is important to recognize it is there, and not accept it as a mystical force your business is a slave to, but something you can react to and plan for in order to take your business further.


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