Strategies to Improve Retail Companies' Profitability in the Face of a Retail Recession

Strategies to improve retail companies’
profitability in the face of a retail
recession
1

Contents
INTRODUCTION ..........................................................................................................................3
LITERATURE REVIEW ...............................................................................................................3
Impact of recession on UK GDP.................................................................................................3
Direct and indirect impact of recession on the retail industry.....................................................4
Effect of recession on buyer behaviour and consumer spending ................................................6
Contrasting views of the authors .................................................................................................8
Strategies taken by UK retailers to improve profitability............................................................9
Different aspects that can be considered to improve profitability and sales of an organisation11
CONCLUSION .............................................................................................................................13
REFERENCES .............................................................................................................................14
2

INTRODUCTION
Literature review is the process of gathering data or information from number of secondary
sources. These sources are peer- reviewed articles, books, magazines and many others. These are
main sources and facilitate investigator in achievement of research aim and objectives in
successful manner. Main purpose of literature review within a research project or dissertation is
to recognise the research gap within current investigation. In present study, main gap is the
Strategies to improve retail companies’ profitability in the face of a retail recession. In previous
studies or investigation, there were lots of information available regarding the strategies used by
retailers for improving their profitability, but there were lack or missing information about the
strategies applied by retailers for enhancing profitability within the face by recession. This is a
main gap and for fulfilling this, research questions will be applied by researcher.
LITERATURE REVIEW
Impact of recession on UK GDP
According to the Trigeorgis, Baldi and Katsikeas (2021), Recession has negative impact
over GDP of UK. Recession has basically defined as fall or decrease in national income is
referred as increase in unemployment, decrease in average incomes, increased inequality and
increase in the borrowings from government all this has negative impact on GDP of UK. The
major issues happen due to recession in an economy are unemployment, increase in poverty,
firms do not have business, increase in government borrowings and many more. Due to recession
the most affected are the people who lose their work or the people who are self-employed their
income falls drastically. It is seen that recession has hit financial sector the most. Many workers
who are doing job of white collar lose their job and banks have seen large losses and decrease in
profit. It had also hit the housing sector very badly. Unemployment and lower wages are the
most negative factor which has negatively affected the GDP of UK as people do not earn money
which reduces their consumption level in the economy. Lower wages increase the cost of living
of people which make them unable to invest or save money. Government of UK has to depend
upon outer borrowings because they get less revenue as firms are unable to pay taxes due to less
production. It is seen at the time of recession firms are unable to make profit and then
government receives very less or no tax from these firms as corporation tax. Employees, workers
and labours receive less income as compared to the period prior to recession which decreases the
3

income tax of government. It is determined that the time of recession leads in lowering the
investment and devastate productive capacity of an economy. When the period of recession is
short the lost result is very limited as it means economy can be bounced back. But when the
period of recession is longer it takes time for an economy to bounce back. This falls the GDP of
UK as it decreases the whole output of an economy. This is the situation where economy is in
down situation and nothing goes in the favour of a country. This is the situation where demand is
low in all industries because of the lack flow of cash in a nation. Simultaneously, this creates the
situation where everyone has to focus over the points that how they can improve an overall
situation. This is so because it has huge negative impact over the GDP of UK. The lack of cash
in country impacts the ability of industries to effectively operate the operations and fulfil the
demand of consumers. This leads in increment of prices and decrement of overall demand. The
low working behaviour of one industry not sticks to only one particular and have to face y all
different industries that having business operations in a nation and outside of it. The another
negative impact of recession over GDP is decrement in level of employment. This is so because
organisations don’t have enough nature of resources and capabilities to effectively continue with
existing or some new employees within an organisation. So, it is clear that situation of recession
has huge negative impact over the overall GDP of a nation. The recession in UK has caused
decline in equity markets as equity market suffers deep decrease or decline. UK has seen drop of
equity market at speed that is unprecedented. This decline shows magnitude of decrease in
activities of an economy and the uncertainty when recession period would go.
Direct and indirect impact of recession on the retail industry
According to Hanaysha (2018), recession has always dominated headlines because of its
negative impact on economy. The recession has affected the retailers doing business in UK. At
the time of recession the overall spending of people is negatively impacted, which also involve
disposable income, demographic, credit and population behaviour. Many years back retail
industry has got its importance in almost everywhere in the world because it satisfies the needs
and requirements of customers. Specifically in UK retail industry has seen lot of growth and
development in its economy. But during the time of recession retail industry has faced challenges
because people have cut down their spending and retailers faced slowdown in their business.
Recession is the situation when unwanted circumstances exist in nation negatively impacts the
4