Economic Impact of Retailing in Pakistan

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Economic Impact of Retailing in Pakistan

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ECONOMIC IMPACT OF RETAILING IN PAKISTAN

Economic Impact of Retailing in Pakistan

School of Business and Economics

University of Management & Technology, Lahore

Proceedings of 2nd International Conference on Business Management (ISBN: 978-969-9368-06-6)

Economic Impact of Retailing in Pakistan

2

Abstract

The Saturation of Retail markets in the developed countries and the growth potential of Asian markets are enticing the big retailing giants to enter the business markets of countries like Pakistan whose retail potential is expected to be $42 billion.

Proceedings of 2nd International Conference on Business Management (ISBN: 978-969-9368-06-6)

Economic Impact of Retailing in Pakistan

3

Introduction

The retail industry is a sector of the economy that is comprised of individuals and companies engaged in the selling of finished products to end user consumers. Sales figures and economic data are sometimes reported separately for restaurants and automotive-related businesses, but by definition they are considered to be members of the retail industry as well.

The economic impact of retailing can be assessed by its contribution to US GDP, that is, 66 percent. Measured solely by revenue numbers, the U.S. is the undisputed leader of the retail industry. Wal-Mart is not only the largest global retailer; it is also one of the largest companies of any kind in the world.

Generally the literature discusses the global impact of retailing on the global economies as well as Pakistan retailing industry. This paper explores the potential of Pakistan retailing industry. Its main aim is to assess the impact of globalization on the global retailing industry and its implications on the Asian markets specifically Pakistan. The paper examines the current retailing trends, strategies viable to grow in recession and the prospects of entry of global retailing giants like Wal-Mart in Pakistan.

The paper has six sections. Section 1 highlights the current situation of retailing. The change in the retail space is outlined in section 2. Section 3 expounds the internationalization of retail chains, its implications on economies and citation of reasons behind Wal-Mart failure in Germany & South Korea. Section 4 summarizes the changes that the markets have undergone during recent turmoil. Section 5 discusses the growth of modern retail in Pakistan. This is

Proceedings of 2nd International Conference on Business Management (ISBN: 978-969-9368-06-6)

Economic Impact of Retailing in Pakistan

4

followed by a discussion that makes sense that why should global retailers come to Pakistan and how can they be successful.

Section 1.Retailing Current Situation

The transformation of the business markets and the consumers improved understanding of the economics and the business operations have made it more challenging for all the business industries. In addition, the economic downturn and the soaring inflation have also raised many issues for all the companies, large and small, across the continents. In the retail industry, the recession caused record-breaking declines in sales, inventories, and consumer confidence, and stock prices. Experts are estimating that the after effects of the recession will last from 18 months to 11 years.

Amidst the turmoil, there is one industry that has flourished. That industry is the retail industry. The retail industry contributes more than 12% to the global economy and employs more than 14% of the World labor (World Economy 2011). The success and strength of this industry is evident from its robust contributions to the strong economies like US, EU, China, Brazil, India & Russia. The retail chains like Wal-Mart have been successful in most of the countries because of their critical understanding of the consumer markets, their needs and the regulations. But even big retailers like Wal-Mart and Sears have felt the heat of...
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