Covid-19 : Impact on Retail Business in East India

Retailers Association of India (RAI) hosted a Webinar titled ‘East India Focus – Impact of COVID-19 on Retail Business’. 

Moderated by Pulkit Baid, Director, Great Eastern Retail, the discussion was an attempt to shed light on the problems faced by the East India 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. The speakers included retail leaders and stakeholders from the eastern region of the country including Anurag Poddar, Director, Presto; Rachit Agarwal, Director, Simaya & Sasya; Siddharth Pansari, Director, Primarc Projects and Tejash Shah, CFO, Baazar Kolkata.

Pulkit Baid, Director, Great Eastern Retail, 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, Director, Presto 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 a break-even to weather the storm.” Speaking about the role of leadership during this economically difficult period, he said, “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 is affected, “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, Director, Primarc Projects about the looming question of rental payments in the coming days. Speaking about the change in consumer behaviour, he said, “I think things will normalize, 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 from the Webinar:

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.

Govt. Support

• Govt. needs to give enough time for retailers to prepare before issuing directives.
• Govt. 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.
• Govt. intervention for guidelines in terms of how to store rentals will be charged.
• Some labour laws should be liberalized to generate and retain employment.
• Govt. 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.
• Govt. 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 cheaper.
• Outdoor advertising will be taking a back seat because people are going out. Radio ads to 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.