Decline in demand: During a recession, consumer confidence is usually affected, resulting in a decrease in consumer demand. People may buy less non-necessities and become more price-sensitive, which may lead to a decline in sales of physical stores.
Intensified competition: During the economic recession, in order to maintain sales and profits, businesses may intensify competition. This may lead to price wars, promotion wars and other behaviors, further compressing the profit space of physical stores.
Rising costs: During the economic recession, various costs may rise, such as rent, wages, utilities, etc. These increased costs may devour the profits of physical stores and make their operation more difficult.
Debt pressure: If the physical store accumulated a large amount of debt in the previous economic boom, the economic recession may lead to an increase in repayment pressure and affect the stability of the operation.
Changes in consumption habits: With the popularity of the Internet and e-commerce, consumers are increasingly inclined to shop online. The recession may accelerate this trend, making it more difficult for physical stores to attract customers.
Tightening financial environment: During the economic recession, financial institutions may tighten loan standards, making it more difficult for physical stores to obtain financing. At the same time, the rising cost of loans may also increase the operating pressure of physical stores.
Although the economic recession has brought certain challenges to the operation of physical stores, there are also some physical stores that can go against the market through innovation, differentiation and efficiency improvement. Therefore, for physical stores, the key is to flexibly adjust the business strategy according to the market environment to meet the needs and habits of consumers.