Modern Retailing-hit by global slump

Along with the global Recession, Most industries have taken a hit.
IT and Real Estate were predicted to be the first ones to go down, and so far the picture looks not that bad. However Modern Retail seems to be the next in line ,being hit by quite a mile.

The format of modern retailing has always been very smart. Running their day to day operations on revolving credit. The business is run by off takes in the market and only off takes. Hence you will see majority of Modern Retailers trying to run Promotions and discounts at their store.
They are able to do so by the economies of scale. Bulk purchases and shelf sale enable them to haggle for more margins from FMCG companies, which are the major stay in the non food segment.
Other Departmental and lifestyle formats try to boost their sales by offering better ambience and shopping experience. These formats are pretty strong in their fundamentals. Having very accurate stock maintanance systems these chains cater a to a niche segment; A segment which wont be necessarily affected by the current global slump.

However the former mentioned chains of Pop and mom stores are facing the heat. The terms of payment that they agree upon  are not supported by the sales they generate. A single rough month in a year is enough to destabilize the buying and payment schedule.
Recently an article had appeared in TOI stating that FMCG retailers plan to associate to get their dues out of retailers, who use arm twisting tactics to delay payment.
FMCG companies are also facing the heat with heavy targets and less consumerism. Modern Retail formats use this knowledge and use it as bait in the form of promises of huge orders. You would very rarely see a FMCG company go to court against such retailers.
Here is an excerpt from the TOI article]
..A CEO of a leading FMCG firm told TOI that the idea of forming such a coalition has cropped up given the "unfair" trade practices being adopted by organised retailers. FMCG manufacturers allege that large retail chains are delaying credit payments because of the prevailing cash crunch situation. This, they claim, has in turn gummed up the entire supply chain, which includes raw material suppliers, packaging companies and other small scale vendors..."
"A promoter of an Indian processed foods company further claimed that not only are delays taking place in credit payments to companies, but some retail chains are actually defaulting on payment. A few supermarkets have extended credit payment periods by 15-20 days as retail chains struggle to meet overheads or pay salaries.."
>REad the full article here
This is now becoming a worrying factor for most retailers and FMCG companies. Due to the boom in modern retail, focus was diverted to them and now somehow this looks shaky. Only the Chains with strong foudations will be able to see through this tough period. Already chains have postponed their growth plans and are clossing non profitable stores. A number of brands have been taken off the shelves. I personally know a couple of people in the Modern Retail Industry who have not been paid salaries and have left the jobs.
WE need to say whether the Indian Retail boom can withstand this period and come out on tops. Am sure it will and will be a learning period for many chains, but it wont happen without some burnt fingers and ideas.