‘Food retailers to earn 56 pc this year as compared to last year’s revenues’

In a report released recently by the Retailers Association of India (RAI), the industry body said that India has over 15 million retailers – big and small across traditional and modern retail. The Indian retail industry employs about 40-50 million Indians directly of which modern trade employs more than 6 million accounting for almost 12 percent of the total retail consumption of the country. Retail contributes approx. 40 percent of India’s consumption and 10 percent to India’s GDP.
However, the industry has been suffering huge losses ever since the country was put under a lockdown from March 23 onwards, and which is slated to be in place until May 03.
The RAI report says that due to the continuing lockdown, most stores except those selling essential food & grocery have been shut across the country. Stores selling garments, saris, electronics, mobile phones, furniture, hardware, etc. remain closed. As a result, non-grocery and non-food retailers are reporting 80-100 percent reduction in sales.
“Even the retailers of essential items are facing losses as they aren’t allowed to sell non-essential goods, which would bring them higher margins,” observes the report.
The RAI report, which is based on a recent survey conducted by the Association, points to the major impacts on the retail sector, categorised as:
Impact on Non-Food Retailers: More than 95 percent of non-food retailers have their shops closed under the lockdown and these retailers are looking at practically no revenues until the lockdown is in place. In the next 6 months, non-food retailers expect to earn 40 percent as compared to last year’s revenues.
Impact on Food Retailers: Most 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 under the lockdown leading to revenue loss. Additionally, 25 percent 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 percent as compared to last year’s revenues.
Overall Business Outlook: 70 percent of the retailers expect business recovery to happen in more than 6 months, 20 percent expect it to take more than a year. Also, <10 percent of medium and large retailers expect to earn any profits till Aug’20 whereas 26 percent of small retailers expect to earn profits in the same time period.
Manpower Rationalization: Small retailers are expecting to lay off 30 percent of their manpower going forward, this number falls to 12 percent for medium retailers and 5 percent for large retailers. On the whole, retailers who responded to the survey expect a layoff of about 20 percent of their manpower.
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 percent 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 and 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.