Economy

Retail industry will take almost a year to recover from Covid-19 shock

Forum Gandhi Mumbai | Updated on April 06, 2020 Published on April 06, 2020

The retail sector has rebounded sharply AFP   -  AFP

 

The Indian retail industry may take at least 9-12 months to recover from the aftermath of the coronavirus pandemic. 20-25 per cent of the industry players may need fresh fund infusion to stay afloat and about 25 per cent of the jobs in the retail industry is likely to get impacted, according to a survey done by industry body Retail Association of India (RAI).

On Monday, RAI and a few industry experts hosted a webinar to discuss the impact of the Covid-19 crisis on the Indian retail industry.

According to Kumar Rajagopalan, CEO, RAI, only about 7-8 per cent of the modern retail trade is functioning at the moment. Post the anouncement of the lockdown, sale of essential items alone is permitted.

The retail industry also consists of fashion, accessories, electronics, etc. Rajagopalan said only 8 per cent of the industry’s modern trade sells essential items.

It is obvious that if only 8 per cent of the industry is functioning, it will take a long time to bounce back from the losses. According to a few snippets of the survey done by RAI among its members, several believe it will take at least a year to bounce back to normal industry standards. RAI represents 13,667 member establishments representing 5 lakh stores and employing 43 million people.

“While a few industry players believe that the impact of the post-coronavirus on the retail industry could last up to six months, most of them believe that it is going to last for anywhere between 9 and 12 months post which there could be a recovery,” Rajagopalan said.

Anuj Puri, Chairman of Anarock. said that the time that the industry will take to recover and this recovery time will also be the time that the industry loses productivity.

According to Pinakiranjan Mishra, lead, consumer products and retail, Ernst & Young, for a long time after the lockdown is lifted, the consumers will be in a ‘reactive mode’ and they will buy only what is needed. After that, we will have the ‘recovery mode.’

job losses

The industry players are also concerned about job losses in the industry. Rajagopalan explained: “While the industry players are not keeping the option of job cuts aside, it’s not their utmost option. There is the uncertainty of job for at least 20-25 per cent in the retail industry.”

Puri said that the industry players are leaning more towards salary cuts than lay-offs.

The industry players are also looking at support and relief from the government. BusinessLine had reported that RAI has made representation to the government on behalf of the retail industry by writing a letter to them.

BS Nagesh, Founder of Trust for Retailers and Retail Associates of India (TRRAIN), said that the main motive of the retail industry is to make sure that a proposal is now given by RAI, which gets approved by the government at the earliest.

Rajagopalan added that besides the government support about “20-25 per cent of the industry will need fund infusion to sustain their business and a lot of players may not be able to survive.” Nagesh further said that the retail industry will need working capital and about 25 per cent of the industry players are likely to into an alternate business.

Speaking about the future of the industry, Mishra said that retail industry players will have to change their business models and adapt to changing consumer behaviour. Whereas Nagesh said that smaller players needed to budget their costs to get out of this turmoil.

 

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Published on April 06, 2020
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