Recession, a correction in the rally of organized retailing boom

The real boom in the Indian retail industry started in the second half of 1990s that saw a wave of big business houses joining the fray. At that time India's organised retail sector was at its infancy though there were some known players like Food World, Subhiksha and Nilgiris in food and FMCG; Planet M and Music World in music; Crossword in books. Then emerged the new trend, hyper & super markets offering three Vs: value, variety and volume. Apart from apparel brands, Consumer durables, FMCG products and Sports brands have also spurred the growth of retails outlets. In fact, so much is the promise of this sector that old economy major like Reliance, BPCL and others want to join the band wagon to cash in on their reach and retail space availability.

The country's retail tycoons are now paying for their irrational exuberance in the past. The correction will sober down the industry. The fabled 30 crore Indian middle class that fuelled the retail ambitions of many big business houses in India, is also probably one of the causes for its downfall today. Even as the rich and fashionables continue to throng the malls and retail outlets in cities, the belly of the market, the middle and upper middle class, has suddenly shrunk. The massive slowdown in Indian economy, result of a world-wide financial meltdown, is the main reason.

But why bubbles are busted? The ‘Herd Mentality’ in Indian business, the shortsightedness and over-reliance on debt funding are said to be the main reasons for the downfall of the sector.