To deal with the current economic climate, retailers are turning their focus to emerging economies as well as differentiating their products through branding and customer service to boost their growth, according to Dr Ira Kalish of Deloitte Services’ LP.
“The turmoil in global markets is having a negative impact on global retailers’ growth, but we are continuing to see a rise in consumer spending in emerging markets,” says Kalish, Deloitte Research’s consumer business director, one of the keynote speakers at the World Retail Congress in Barcelona this week.
“In the longer term it is possible we will see the continued rebalancing of the global economy with a shift in consumer spending growth away from the US towards Asia.”
Kalish believes the time has come for countries such as China, India and Russia, which provide great growth opportunities for multinational retailers and suppliers.
“A number of other factors will also have an impact on consumer spending. The continued high price of oil is likely to persist, as is the recent growth in food prices. The latter has been driven by subsidies for the production of crops for biofuels leading to an overall shortfall in the global stock of crops for food.
“The other major factor contributing to the rising price of food is the emerging middle class in China and India who are becoming more affluent and creating an increased demand for meat and dairy products,” explains Kalish.
According to Kalish these factors will dampen growth of other types of consumer spending and are also already creating inflationary pressures in many countries.
“In addition, we are seeing inflation globally and this may lead to tighter monetary policies from central banks. This means that, when recovery comes, it could be a slower recovery rather than the rapid growth seen in recent years.
“The downturn in the US housing market has also played a part in the slowing of consumer spending and it may be the case that we see similar events in other countries.”
While there are several trouble spots for global retailers, Kalish says there are opportunities out there for retailers that are innovative and focus on the emerging markets as well as branding and customer service.
“Finally, as we see rapid growth in some emerging markets it is possible that we will begin to see some of the retailers in those markets grow rapidly and globalise. Some emerging market retailers will invest in expanding in their domestic market and may even expand to developed markets.”