Retailers, eateries stare at prolonged slump1 min read . Updated: 14 Apr 2020, 12:44 AM IST
- Consumers may not venture out to crowded places such as malls, but will continue to buy essentials
- For restaurants, the challenges will continue to mount as consumers bank on online deliveries and avoid eating out.
NEW DELHI : India’s retail industry, which is dealing with prolonged store closures, could take months to revive as subdued discretionary spends and the longer-than-expected need for consumers to stay indoors impact clothing companies and restaurants.
Retailers will have to change business models, focus more on online delivery, ensure better hygiene, and liquidate stocks once they tide over the lockdown, said industry executives.
“As soon as the stores and malls open, their first priority should be to encash inventory," said Rahul Mehta, former president of Clothing Manufacturers Association of India, which represents garments manufacturers and exporters in India.
Businesses will soon have to rethink their strategy, said Mehta, who estimates huge job losses in the garment manufacturing industry. “The volume-driven business strategy needs to be re-looked at. We will also need to re-look at our scale, profitability, and pricing policy," Mehta said at a webinar hosted by Retailers Association of India (RAI) and Trust for Retailers and Retail Associates of India (TRRAIN) on Monday.
RAI has been pitching for a comprehensive stimulus from the government to prevent job losses. It would take at least nine months for India’s retail industry to recover from the impact of the covid-19, RAI had said. As much as 20-25% of jobs could be under threat, said RAI, which represents 13,667 member establishments with 500,000 stores.
Revenues at retailers could be disrupted for another six months, analysts estimated in a separate report by brokerage firm Edelweiss. “Covid-19 has snapped shut discretionary expenditure by consumers. Worse, this situation, in our view, may not ease until the festive season, H2FY21. This implies a clear revenue disruption for six months," Abneesh Roy of Edelweiss Research said in a note on Monday.
Consumers will not venture out to crowded places, but will continue buying essentials, Roy said. Shoppers may conserve cash, make discretionary spends only if necessary. Shoppers are also expected to buy more online, the report said.
For restaurants, the challenges will continue to mount as consumers bank on online deliveries and avoid eating out. The industry, which relies heavily on discretionary spending, will take time to recover, said Anurag Katriar, president, National Restaurant Association of India.