BENGALURU: The retail industry is staring at losses of about half a billion dollars due to the closure of malls, apparel stores and the recent decision to pull shutters on factory production due to the havoc created by the coronavirus, the Retailers Association of India (RAI) said.
“With revenue at Indian retailers selling non-essential items such as apparel and jewellery taking a huge hit, it will inevitably result in job losses of close to 8 million people involved in organised and informal retail if the government does not step in immediately,” Kumar Rajagopalan, CEO of RAI, said.
Future Retail, owned by Kishore Biyani, said most of its stores are closed, and they are selling only essential commodities and grocery items. “The business of the company is adversely affected by temporarily shut down of stores, de-growth of revenue, sizable drops in footfalls and selective spending on essentials,” it said.
The RAI represents 500,000 stores in India, including brands like Madura Fashion, V-Mart, Shopper’s Stop and Future Group. Demand for non-essential items have plummeted as people stock up food, bracing for a prolonged lockdown.
Only 25% of India’s retail landscape is organised, employing about six million people, while the remaining employs the bulk of the 30 million. Any job loss would have a deep impact on the sector which has been going through a period of challenge over the last one year due to weak demand in a slowing economy. RAI said it has asked the government to consider providing a moratorium of 120 days from banks on all interest payment up to the end of June, besides allowing banks to give out 25% additional working capital credit lines at subsidised rates till September.
“We expect this problem to sustain for about six months for the retail industry as even if the impact of this disease dies down in the next two months, consumers will not immediately throng to the stores,” Rajagopalan added. Aditya Birla Fashion, which owns brands such as Peter England and Allen Solly, has shut its factory operations in Karnataka, Tamil Nadu and Odisha till March 31 and while revenue will be hit, it said the uncertainty around the situation makes it difficult to ascertain the exact impact.
Jewellery and watch maker Titan said footfalls in its stores had come down over the last one week and it will shut all its company and franchisee operated stores till March 29. The company had 1,709 retail chain stores as of December. “It is very difficult to determine the numbers immediately. We will have a clearer picture in the next two weeks but it is safe to say the impact of this would be felt in the next two quarters,” said Pinakiranjan Mishra, national leader, consumer products and retail, EY India.
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