The Indian retail market is the 5th largest global destination in the retail space and is considered to be one of the most dynamic and fast-growing sectors.
According to the Retailers Association of India, the retail industry achieved 93 percent of pre-Covid sales in February 2021. However, the COVID-19 crisis has had a severe impact on the Indian retail industry and overall revenue generation baring few segments within the retail space.
The second wave has directly affected the production, demand and supply chain, and operations of the Indian retail sector. The disruption involves all the activities of reselling new and used goods primarily to the general public for consumption.
Being one of the pillars of the Indian economy, it employs about 40 million Indians. This sector also accounts for almost 10 percent of India’s GDP. India presents a large market opportunity and holds an important position in the value chain where the retail sector primarily serves the final consumers. The retail sector is a capital-intensive and labor-intensive business, which signifies that any disruptions can lead to disproportionate employment consequences and incorrigible financial crises in the country. The labour force entails in this sector are majorly part-time, low-wage, and on-call workers which are devoid of the social protection measures which increase the social consequences of the crisis in the retail sector.
As the second wave has become more contagious than the previous one, and with lockdown imposed by the government, the retail sector has witnessed a change in consumer behavior and overall lifestyle. The fear of crowded places will drive more consumers to move towards online shopping and this will have an overall impact on the retail business.
Retailers need to take into account that consumers have become more conscious of health, hygiene, and safety norms and retailers need to manage these expectations at all stages of their interactions.
Convenience led by contactless deliveries will find more acceptability amongst the customers, so proper planning and execution towards this initiative need to be taken. Given the safety concerns, customers are opting for more digital and contactless payments. With digitization being the success mantra, retailers have started different ways to move with the trend and innovate themselves to improve sales and enhance digital footprints.
Lockdown is the new normal amidst this pandemic and consumers are moving more towards digital. Consumers have changed their traditional shopping habits, so there is a need for sellers to change their selling habits as well and opt for online shopping through websites or applications.
Since staying afloat would be a top priority now, reducing costs, evaluating the product lines, and streamlining processes can be achieved at this time when many retail outlets are still closed. Ideation, customer engagement, and a strong focus on the creation of relevant content for social media are some activities that will help in staying updated.
Industry players in the retail sector are seeking a bailout plan from the government as they struggle to survive the second phase of the lockdown due to financial stress. One of the measures to offset the impact can be readily available Emergency Liquidity Assistance (ELA) to the retailers by the government. ELA aims to provide Central Bank money to solvent financial institutions that are facing temporary liquidity problems, outside of normal monetary policy operations. Though special measures by the government, RBI, SEBI, IRDAI, and the sectoral ministries are offering large and transversal emergency support to the retail sector, they need to ensure that it is accessible to all retail firms, and only viable firms should offer the liquidity support measures to prevent adverse impact on business dynamism.
Extension of the Emergency Credit Line Guarantee Scheme (ECLGS) 3.0 to retailers is a part of a fervent appeal by the Indian Retail sector to Finance Minister Nirmala Sitharaman to strengthen the firms in the tough time of Covid-19 second wave. As the funds are already provided to the hospitality, travel, and tourism industry till June 30, 2021.
The need of the retail industry is to survive the current crisis and safeguard itself by combating the emerging challenges to maintain financial stability, demand and supply, and to balance out the overall productivity. Government support is the required aid to the retail sector though it seeks tailored policy for the specificities as well. But with this, the industry players also need to take preventive measures to offset the impact of Covid-19 on the retail sector. New trends induced by the pandemic are going to be set in the retail industry. But retailers who will grasp these changing trends will emerge stronger and better connected with their customers, partners, and external and internal stakeholders