Stress in local businesses
By: Tajamul Islam Salroo
As we know local businesses are vital to the local economy because they create jobs, provide essential services and goods, contribute to taxes, and keep money circulating in the community. But for the last couple of years, there has been stress in the local business for which I have found out some important reasons, as below.
Notably, National and multinational companies, having more resources and stronger brand recognition, have widely entered our territory over the last couple of years and started giving intense competition to the local players. Local businesses are thus struggling to compete and attract customers.
At this point of time there is a saturation in almost all kinds of businesses and in the battle to capture more customers, new entrants have been fighting a price war, resulting in the decline in profits. This ends up in the worst battle between the local competitors, taking a devastating toll on local businesses.
Kashmir with a population of merely4 million has a limited market while with the continuous entry of players into the trade, the customer retention rate for an existing business has declined leading to a slump in the local businesses. We can say that for the same demand, supply is more, hence, the market surplus
Besides, one of the reasons local businesses are struggling at present is that most of the people don’t support local. Many customers have a strong preference for global brands over local brands for the reasons of their brand name, perceived quality, and global culture. So in that scenario, it becomes challenging for local brands to compete with global brands.
We need to realize that one of the important factors in damaging a segment of local business is the growth of online shopping. Large online firms offer lower prices and wider product range that makes it convenient for customers to shop while harder for local businesses to compete.
This indeed has reduced the foot traffic at local locations, leading to the circulation of less money within the local economy.
Economic factors like unemployment, inflation, wages, prices, personal financial condition, etc. have also been influencing consumer behavior leading to unpredictable fluctuations in demand, affecting the revenue and stability of small businesses.
Higher inflation has reduced the overall purchasing power to some extent and therefore impacted consumer spending on goods significantly.
Ironically, it is a hard fact that hardly local businesses are able to expand beyond local markets due to challenges related to consumer preferences, increased competition, high transportation and innovation that deter the growth of local businesses.
In conclusion, local businesses confront many challenges that hinders their growth and stability while addressing these issues becomes imperative for their survival. It becomes crucial for local businesses to find effective solutions to these challenges for their stability and sustenance. The need of the hour is to frame robust strategies and policies to save the sinking local business.
