How ongoing lockdown continues to cause havoc on the health of retail industry?

Lockdowns are recommended to minimize the impact of covid 19 on general heath, but it has been proving fatal for retail industry.
How ongoing lockdown continues to cause havoc on the health of retail industry?

COVID-19 is dangerous not only to the health of people but also their livelihood. India has reached the stage where the government and citizens are on the highest alert.  India is a $2.9 trillion economy. The panic was triggered everywhere around the world when China, a $14.4 trillion economy crashed. China manufactures 28% of the world’s products. Due to COVID-19, the Chinese manufacturing factories are in shambles leading to the world’s shops and warehouses low in stock or worse, empty.

As per the report shared by Retailers Association of India(RAI) due to ongoing lockdown most stores, except stores selling Essential Food & Grocery, have been shut across the country. Garments, Saris, Electronics, Mobile Phones, Furniture, Hardware etc. almost all stores are closed. Non-Grocery/Food Retailers are reporting 80% to 100% reduction in sales. Even retailers of essential items are facing losses as they aren’t allowed to sell non-essential items, which would bring them higher margins.

As per RAI data, Indian Retail Industry has more than 15 million retailers, both small and big, traditional and modern trade. Retail employs 40-50 million Indians directly of which Modern trade employs more than 6 million Indians equaling to almost 12% of the total Retail consumption of the country. Retail contributes to approx. 40% of India’s Consumption and 10% to India’s GDP.  However,  India is under lockdown since 23rd March, and today government has announced the lockdown extension till 3rd May.  Losses are piling up due to the continuous lock down scene.

Speaking on same, Dharmender Khanna ,Brand Head Lotto , “we are closely monitoring the situation and abiding by all the instructions the government and health authorities have shared. It is too soon to say how the situation will shape in the coming days.We plan to shift most of the sales focus on our eCommerce channels and omnichannel.”

Echoing with khanna, Saurabh Gupta - Director Mustard Clothing Company, “Retailers have to see how to survive since there is still no clarity how long this scenario will exist. We're in constant touch with our suppliers, stakeholders and are making contingency plans to ensure minimal impact to our supply chain once normalcy returns”

Key impact of lowdown as per survey done by RAI

Impact on Non - Food Retailers – More than 95% of Non-Food Retailers have their shops closed in the lockdown and are looking at practically no revenues till the lockdown is in place. In the next 6 months, Non - Food Retailers expect to earn 40% as compared to last year’s revenues

Impact on Food Retailers – Most of Food Retailers also sell non-essential goods in the same and / or different stores. The non-food business in the stores has come to a standstill in the lockdown leading to revenue loss. Additionally 25% of these retailers have non-food stores which have been closed leading to further losses. In the next 6 months, Food Retailers expect to earn 56% as compared to last year’s revenues.

Overall Business Outlook – 70% of retailers expect business recovery to happen in more than 6 months, 20% expect it to take more than a year

· <10% of Medium and Large Retailers expect to earn any profits till Aug’20, 26% of Small Retailers expect to earn profits in the same time period

Manpower rationalization – Small Retailers are expecting to lay-off 30% of their manpower going forward, this number falls to 12% for Medium Retailers and 5% for Large Retailers. On the whole, retailers who responded to the survey expect layoff of about 20% of their manpower.

Industry calling for immediate bailout package

As per survey data shared by RAI, following are few recommendations that retail industry is seeking on urgent basis.

Employer Support and Rent Waivers: 2 out 3 Retailers employing substantial workforce want Employee Salary and Rent support to manage their fixed costs and limit manpower downsizing. Without this support the Retailers are looking at ~20% Manpower reduction due to Covid-19

Relief on GST, Taxes and Loans: 2 out of 5 Retailers want concessions and relief in this area to ensure business continuity in the face of the revenue downfalls and heavy losses for FY’21. Government and Financial Institutions have to come together & provide a meaningful package for the Industry to survive the impact of COVID-19

Electricity & other utilities: Retailers are requesting for additional 60 days for payment of electricity charges and waiver of minimum demand charge for the same period. 1 out of 10 Retailers consider this as a key ask from the government to manage finances in this period of uncertainty.

 

 

 

 

 

 

 

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