India has been in a state of lockdown for more than 50 days due to the Novel Coronavirus pandemic and despite the government deferring loan EMIs and easing credit, micro, small and medium enterprises, and retailers are staring at a bleak future. The East India retail industry, which has a strong presence of local and small retailers, is facing an acute cash crunch due to a sharp fall in business and operational challenges with low or zero manpower. It will be a big challenge for the East Indian retail industry, which has been on growth spree over the last ten years, to overcome the current situation.
Retailers Association of India (RAI) organized a webinar called ‘East India Focus – Impact of COVID-19 on Retail Business’, the next in Coping with COVID-19’ series. Moderated by Pulkit Baid, Director, Great Eastern Retail, the webinar focused on the issues faced by retailers in East India. The speakers included retail leaders and stakeholders from the eastern region of the country:
– Anurag Poddar, Director, Presto
– Rachit Agarwal, Director, Simaya & Sasya
– Siddharth Pansari, Director, Primarc Projects
– Tejash Shah, CFO, Baazar Kolkata
The discussion was an attempt at shedding light on problems faced by the region due to the imposition of the lockdown, change in consumer behaviour and markets, and the role of various stakeholders like landlords, retailers and the government in the revival and resurgence of the economy.
Market Uncertainty
The panelists discussed their lack of a direction as the situation is constantly evolving and goals are shifting drastically within the epidemic timeframe. Pulkit Baid, the moderator of the session, said, “The government has done a great job on the health part and I am sure, that they’ve planned something for the wealth part as well. We have to be patient. Patience is the companion of wisdom. And wisdom is like bread dough, it takes its time to rise.”
Addressing the market uncertainties and constant changes in the tentative date for lifting the lockdown, Anurag Poddar said, “We shouldn’t plan too early; the situation is evolving, and the goalpost is changing every day.”
Tejash Shah, CFO, Baazar Kolkata, said, “When it comes to value retail business, there are going to be a significant amount of exits in the next 6 to 9 months. The focus right now is not on profitability but on achieving breakeven to weather the storm.”
Speaking about the role of leadership during this economically difficult period, he added, “Leaders have to lead from the front. They could take pay cuts during the lockdown period.”
Rachit Agarwal, Director, Simaya & Sasya, explained how the business of apparel has been affected, saying, “The market for us is going to change significantly. The Big Fat Indian wedding for some time is not going to be either big or fat. That’ll take a big hit on the wedding apparel industry. On the other end, working from home is going to be the new normal, which is going to hit the office wear industry really hard even post lockdown.”
“There will be no one size fits all with the solutions we see today, it’s going to be situation, geography and transparency
based when it comes to rental levies of any sorts”, said Siddharth Pansari about the looming question of rental payments in the coming days.
Speaking about change in consumer behaviour, he added, “I think things will normalise, even with things like work from home becoming the new normal, the silver lining is that it will bring business to cafes because people will end up working from these places.”
KEY TAKEAWAYS
ON SELLING ONLINE
– Some categories are more suitable for online. Those who are should explore that option.
– Colour and size standardisations need to be taken care of before going online.
– Value retailers to first put this in order and take care of basic hygiene before going online.
PAYMENT OF SALARIES
– Majority of cash is going towards paying salaries of those earning less than Rs. 1 lakh.
– Maintaining transparency among stakeholders is important. Leadership needs to lead from the front, opt for pay cuts or deferred salaries to ensure the front-liners are paid.
– Resorting to credit lines should be the last resort for payment of salaries.
GOVERNMENT SUPPORT
– The government needs to give enough time for retailers to prepare before issuing directives.
– The government needs to come out with phase wise resuming of operations.
– Support from RBI to ensure that banks help with liquidity.
– Help with rent, EMIs still getting debited and salaries to employees.
– Government intervention for guidelines in terms of how store rentals will be charged.
– Some labour laws should be liberalized to generate and retain employment.
– The government should refrain from measuring all retailers with one scale. Different sizes and types of retailers. Govt. has to de-legislate.
– Government has to ensure consumption starts. People will have to keep buying. So that everyone is able to survive the next one year.
– Stimulating consumption is more important than just levying taxes and interests.
– The government needs to address the issue of interest payments; with zero revenue or most retail, piling interests is a huge cause for concern.
– Subsidy on the safety and sanitization products that store-owners will end up spending large amounts of money on once operations open to ensure a safe shopping environment.
Marketing spends post-COVID
– Marketing to move away from conventional media to new media.
– Each business will walk its own marketing walk based on the ticket size and business type.
– Conventional advertising will become cheapier.
– Outdoor advertising will be taking a back seat because people are going out. Radio ads too have a reduced effect because people spend time listening to the radio majorly when they are commuting and that’s been put to a halt now.
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