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Retail Lockdown 2020

Predictions

According to the report published by Brand Equity in March, pre-lockdown, the Indian retail industry was evolving as one of the most dynamic and fast-paced industries due to the entry of Global Conglomerates and FDI results. Total consumption expenditure was expected to reach nearly Rs. 2735 cr by 2020 from Rs. 1385 cr in 2017, since the approval of FDI by GOI. Retail sales are an important economic indicator because consumer spending drives much of our economy. Think of all of the people and companies involved in producing, distributing, and selling the goods you use on a daily basis like food, clothes, fuel, and so on. 


According to reports “It was also predicted that the top retail companies in India were expected to grow in the coming few years owing to improving standards of living in the region coupled with rising levels of disposable income. Retail companies in India were focusing on expanding the presence of retail brands into new market territories, like Tier 3 cities as the rapid industrialization and globalization have created a need of owning brands by the thriving youth present in these cities. Retail has accounted for over 10% of the India’s Gross Domestic Product (GDP) and around 8% of the employment. Extensive Indian retail industry analysis has shown the Indian retail companies were likely to propel the retail market in India beyond a value of $1 trillion within the next ten years. The top retail companies in the world were also foraying into the Indian retail industry and launching several departmental stores, brands, products, production and channels in India. Mergers and change in ownership of some international brands to Indian Conglomerates, has also led to change in SOPs creating more employment. Overall, the top retail companies (Indian) in the world were likely to have a robust growth as India became 5th largest retail consumer country in the world.

Retail India

                         MARKET SIZE OVER THE PAST FEW YEARS (US$ BILLION)

Current Scenarios

The Coronavirus, which was in fourth phase, may continue further, had had a huge impact of employment status. It can come down to 4% in national contribution from annual 8% share in employment sector. Also, E-commerce will be merging as no-contact commerce, which is going to be the new face of Indian Retails. Majority of brands have already started shifting to this new platform  where the market giant Reliance also Launched e-shopping via WhatsApp.

Retailers (unorganized sector) who have been forced to shut the shops for continuous 3 months now, have reported the huge loss of revenue. Whereas no need to mention that the unorganized sector of Retail is approx 65% of the whole chunk. Also, this sector has done major pay-cuts,layoff and furloughing of staff/salaries to save the business and somewhat keep on running them. 

As a result of Covid-19 crisis we can expect

  • 30% layoffs by small retailers
  • 12% layoffs by Mid-size retailers
  • 5% layoffs by large retailers

So, its almost 20% of Retail workforce which will be laid off due to the crisis. With little or no relief for the Retail industry from government, this industry will be facing a huge crisis in employment and profitability sector as supply chain has also taken a major hit.

E-commerce has noticed a rapid growth during the Covid-19 crisis. Customers have the ease and increase in choice of products at the lowest rates. E-commerce is probably creating the biggest revolution in the retail industry, and this trend would continue in the years to come as its the no physical-contact platform. Its forcasted that by 2021 traditional/unorganized retail will hold a major share of 75%, organised retail share will reach 18% and E-commerce retail share will reach 7% of the total retail market. 

Retailers should leverage the digital retail channels (e-commerce), which would enable them to spend less money on real estate while reaching out to more customers in tier-2 and tier-3 cities.

The Government of India may change the Foreign Direct Investment (FDI) rules in food processing, in a bid to permit e-commerce companies and foreign retailers to sell Made in India consumer products. GOI has allowed 100% FDI in online retail of goods and services, thereby providing clarity on the existing businesses of e-commerce companies operating in India. Its a good time to enter in the E-commerce sector.

Composed by:

Dhruvica Agrawal

RETAIL AND IMAGE BUILDING CONSULTANT

In collaboration with SilverLegals( www.silverlegals.com ) 

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