The epidemic of recession is sending shivers all across theglobe affecting all the businesses irrespective of its nature. As against theeconomic backdrop, credit crisis, and changes in the consumer spending patternhas put the suppliers and retailers in jeopardy. Even big organizations havesuccumbed to the pangs of the global turmoil, and have filed for bankruptcy.Many others struggle to survive the tide through other options like lay offs,and cost cutting.


Both suppliers and retailers face recession realities suchas bad debts, reduced consumer spending, non-availability of credit lines tosustain their business operations, and a significant increase in markdownmoney. To survive the pangs of recession, suppliers, and retailers will have tojoin hands together in taking the bull by the horns.


Survival strategies:


In countenance with the most challenging period of therecent years, it is required that the suppliers have to adjust with theretailers regarding their business strategies in dealing with the environment. Asthe retail inventories are depicting a downward trend, and discounts with acontrary upward trend, and credit still tight, economists contemplate thatthere will be a drastic modification in the consumer spending pattern. To obtainprompt responses, suppliers, and retailers use coercive strategies forattracting the consumers.


  • Financing:


Apparel suppliers will have to haveadequate back up of cash to carry them through tough times. With bankstightening their policies regarding credit, it is difficult for the suppliersto do so. They can considers for alternative financing methods such as purchaseorder financing, borrowing against other assets, such as traditional accountsreceivable and inventory.


  • Margin:


Suppliers are likely to face immensemargin pressure from the retailers. Suppliers need to intensify their effortsto identify new sources of supply for better prices, and raw materials. Theyhave to co-ordinate with the retailers, monitor, control and collect invalid orunauthorized detections and chargebacks from retailers.


  • Reduction in Overhead costs:


Apparel manufacturers need toidentify potential cost reduction strategies, eliminate waste through promptanalysis of operating expenses. Todays consumers live in small family, doubleincome households, are more informed and internet savvy, but are more timeconstrained. Hence they are very particular about their shopping preferences.Identifying the right products matching with the consumers preferences, willhelp the supplier and the retailer to reduce their expenses, and also gainsizeable profit margins.


  • Avoiding Bad Debts:


During the period of economicturmoil, bankruptcies are unavoidable creating a shattering effect on manysuppliers. Companies must enter into factoring arrangement, to insure againstprobable losses due to bad debts. By enhancing internal collection process andimproving credit monitoring procedures suppliers can sell to retailers even intimes of financial crisis.


There are many influences that affect the bottom lineprofitability of both the suppliers and retailers. Suppliers will try tomaximize the number of units for sale, whereas a retailer will focus onoffering more choices to the consumers, and will focus on launching newproducts.


Globalization is a positive force in the retail industrythat focuses on overseas expansion and market growth. Despite the globalslowdown, coordinated efforts of supplier and retailer are likely to bring drasticchanges in the industry. Retail and supplier consolidation is a new trend, andis set to evolve.


Reference:

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