The Coping with COVID-19 series of webinars, hosted by the Retailers Association of India (RAI), saw another edition focusing on the ramifications of the crisis in East India with a webinar titled ‘East India Focus – Impact of COVID-19 on Retail Business’.
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 including Anurag Poddar, Director, Presto; Rachit Agarwal, Director, Simaya & Sasya; Siddharth Pansari, Director, Primarc Projects and Tejash Shah, CFO, Baazar Kolkata.
The discussion was an insight into the plight of retailers from varying backgrounds and their concerns regarding the future of their businesses and retail in general due to the imposition of the lockdown. Changes 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 were all points of discussion during the hour-long webinar.
The changing landscape of retail
In these times of uncertainty, when retailers are unsure when the lockdowns would end and they would be able to get back in business, there is no single solution that fits all. The panellists discussed their lack of a direction as the situation is constantly evolving and goals are shifting drastically within a matter of as little as 2 weeks.
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Anurag Poddar of Presto feels that businesses with small ticket sizes are likely to be affected less. Even when the lockdown is lifted, consumers will likely not hesitate in fulfilling smaller wishes than going for spending handsome amounts in order to preserve cash.
However, there is no doubt that consumer patterns and buying behaviour will change. Even at this time when business is solely dependent on e-commerce, it is a concern for most retailers as they feel not all categories are meant for online selling. Rachit Agarwal, Director of Simaya & Sasya, who provides more of an experiential service in terms of wedding outfits, feels that bricks-and-mortar is an indelible part of his business. He explained how the business of apparel is affected, “The market for us is going to change significantly. For some time, the ‘big fat Indian wedding’ 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 officewear industry really hard even post-lockdown.”
Value retailers will also have to consider various factors before taking their business online. From colour and sizing to basic hygiene, all will matter before starting e-tailing or value chains can expect massive sales one month and a huge volume of returns the next month.
Another issue is that of survival. While consumers may want to start plying on the streets, the huge monetary impact of this crisis may force most retailers to cut down on expenses considerably. 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.”
In fact, not only retailers, malls that are largely social spaces may be reduced to being functional spaces altogether. Sidharth Pansari expects the footfall to reduce to 30-35 per cent as people will stop visiting cinema halls and food courts post the crisis along with reducing their spending which results in lesser trips to the mall.
Government support
Retailers all over the country are calling for coordination between the Centre and the States. The mixed regulations and their shoddy implementation are causing the already troubled retailer more grievances.
One common task has been to get clear directives as to the plan for the future. Last minute directives on opening the economy may lead to mass confusion and mismanagement, as the retailers will not be able to get their operations back up on time. There needs to be a timeline for them to prepare themselves even if the Government is planning a phase-wise resuming of activities.
Another problem has been getting help from banks as RBI has given no clear instructions to banks to help retailers retain their liquidity. Most of these retailers work on daily cash sales, and hence, do not have high cash reserves. The only medium of survival during this crisis is cash, as salaries also have to be paid.
Tejas Shah also pointed out that subsidies should be given on equipment for sanitation and safety, as operating costs will go up to ensure a safe shopping environment when stores open again. Even a single mistake on the part of a brand will fall to be very costly in terms of losing consumers’ trust.
Many Governments all over the world have waived off electricity bills, rents, deferred taxes and even helped retain employees by paying salaries or unemployment allowances. However, the conflicts over rents are so imminent that the panellists were of the view that all retailers and stakeholders need to be transparent and come up with mutually benefit solutions to strike a balance.
Speaking about the issue, Anurag Poddar said, “The main cash outflows are in three areas – rents, EMIs and salaries. While salaries have become more of an individualistic ethical issue, EMIs and rents are two areas where the Government can provide more guidelines. The moratorium on interest offered by the Government is not as helpful as it sounds, and rents are an area where conflict resolution may take up most of a retailer and their stakeholder’s time.”
