MANAGEMENT

Strategies for Retail Management during Economic Downturn

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CHAPTER I: INTRODUCTION1

Economic Downturn1

Recession-proofing2

CHAPTER II: LITERATURE REVIEW3

Luxury Retail Industry3

Strategies for Retailers in Recession10

Employee Support and Development12

CHAPTER III: METHODOLOGY14

Method14

Research Design15

Population and Sampling15

Ethical Considerations15

Data Collection16

Data Collection Technique16

Reliability16

Validity17

CHAPTER IV: FINDINGS AND ANALYSIS18

Competition19

CHAPTER V: SUMMARY, CONCLUSION AND RECOMMENDATIONS22

REFERENCES25

Strategies for Retail Management during Economic Downturn

CHAPTER I: INTRODUCTION

Economic Downturn

Economic downturn is a phase during which selling, buying, production and employment tend to decline, with the overall economic activity in the country slowing down. According to macroeconomics, an economic downturn is a reduction in the gross domestic product that yields a number of negative economic consequences. In other words, a recession settles in the national economy. A recession occurs when the nation's economic activity continues on a downward trend for two consecutive quarters of the fiscal year. Typically, recession is followed by a stark rise in economic activity and growth. However, as recently as 2008, global economy suffered a recession that spiraled down to a state of depression. Recession generally increases unemployment, reduces output in the economy, investors retract their investments and gross national product declines. The effects of recession have also impacted the retail industry with consumer confidence and spending take a hit (Shumanov & Ewing, 2007, 70).

The economic downturn, which began in 2007, is the most significant in nearly 80 years (O'Connell, 2010). Table 1 contains a list of the recessions of the 20th and 21st centuries in America, highlighting America's most difficult financial periods. There have been 22 recessions since the beginning of the 20th century, indicating that there is approximately 1 recession every 5 years. The 2007 recession was composed of multiple financial aspects including: (a) stock market conditions, (b) the value of the currency, and (c) curtailment of expenses by businesses and individuals (Chamberlin, 2009; Hamilton et aI., 2009; Poole, 2010; Sepheri et aI., 2007). Subsequently, many businesses were affected and millions of jobs were threatened or lost. Subprime mortgages were loans issued at high interest rates to individuals who otherwise would not have been able to meet scheduled payments. These interest-only loans were made based on lender ability to regain the value of the loans in foreclosure.

The retail store industry continues to look for ways to create better service that will lead to an increase in customer satisfaction and customer loyalty. The retail marketplace in the 21st century is fueled with competition, creativity, and innovation. Retail store managers throughout the United Kingdom are taking into consideration managerial tools and processes to improving customer satisfaction and customer loyalty. Technology, marketing, and inventory management systems are tools that can be used by retail stores to preserve and improve consumer-buying habits (Bowden, 2009, 63). The outlook of the global economy plays a significant part on the lives of people all over the world. The global economy impacts people behaviors and sudden changes in the financial markets impacts consumers buying habits. The downturn of the global economy has sparked the credit crunch, the movement of the dollar, the rise in the price of oil, ...