Retail industry expects business recovery in six months in India

An unprecedented 70 per cent of retailers in the country anticipate that their business will recover in more than six months, while 20 per cent expect it to take more than a year, a survey conducted by industry body Retailers Association of India (RAI) stated.

The retail industry, which has more than 15 million retailers and employs over 40-50 million people, is facing the wrath of the coronavirus outbreak and a stringent nationwide lockdown. Most stores, except shops selling essential food and grocery, are shut across the country.

In this backdrop, Retailers Association of India conducted a survey with retailers to gauge an overall view on the impact of the pandemic on their business and manpower. The survey was filled by 768 respondents across the country.

“70 per cent of retailers expect business recovery to happen in more than 6 months, 20 per cent expect it to take more than a year,” the survey stated.

The poll stated that more than 95 per cent of non-food retailers have their shops closed in the lockdown and are looking at practically “no revenues till the lockdown is in place”.

“In the next 6 months, non-food retailers expect to earn 40 per cent as compared to last year’s revenues.” Alluding to the food retailers, the survey found that their business has come to a standstill in the lockdown leading to revenue loss.

“25 per cent of these retailers have non-food stores which have been closed leading to further losses. In the next 6 months, food retailers expect to earn 56 per cent as compared to last year’s revenues,” RAI’s survey added.

In these challenging times, small retailers are expecting to lay off 30 per cent of their manpower, while medium retailers and large retailers might put down 12 per cent and 5 per cent, respectively.

“On the whole, retailers who responded to the survey expect lay-off of about 20 per cent of their manpower,” the survey added.

The industry body has requested the government to provide rent waiver, relief on GST, taxes and loans and electricity to the retailers to bring them out of the muddle.

India’s annual retail inflation eased to a four-month low of 5.91 per cent in March from 6.58 per cent in the previous month, helped by a smaller increase in food prices, government data showed on Monday.

Karan Mehrishi, Lead Economist, Acuite Ratings & Research, Mumbai said, “The March CPI number is already showing the inflationary tendency of the lockdown on domestic consumption. While it was so believed that food inflation will come down dramatically in March, it wasn’t the case. Items such as vegetables inflated by a whopping 18.63 per cent. Core inflation however remained well contained, recording a sub 4 per cent number.”

“The month of April and May are expected to see further increases in food inflation and related primary consumption items. Nevertheless, the March number notes the closure of FY20, and combined CPI number has averaged 4.7 per cent, which is well over the RBI’s target of 4 per cent. It will be difficult for the RBI to raise rates at this time, despite inflationary tendencies.” Sakshi Gupta, Senior Economist, HDFC Bank, Gurugram said, “The NSO signalled that the inflation release is not comprehensive as field surveys were suspended due to the lockdown. Therefore, it does not reflect if there were any price pressures due to panic buying of essential goods during the second half of March 2020.” “In the coming weeks, the focus will be on the supply side disruptions while demand side pressures remain absent. On the balance, food prices are likely to remain contained in H1 FY20 on account of record rabi food grains and horticulture production.” Sujan Hajra, Chief Economist, Anand Rathi Securities, Mumbai said, “India’s present monetary policy will continue irrespective of the level of inflation. We see a possibility of the logistical problems leading to higher inflation in April. But, the Reserve Bank of India will look through that.

Indian refiners are likely to continue prompt export of refined fuels for at least another two weeks to avoid a complete shutdown after the coronavirus lockdown hit local demand, company officials said.

A three-week lockdown due to end in mid-April slashed state fuel retailers’ local diesel sales by about 26 per cent and petrol by about 17 per cent in March, provisional data shows. Indian Oil Corp, Bharat Petroleum Corp and Hindustan Petroleum Corp control about 90 per cent of fuel pumps in India, where falling fuel consumption has deepened crude refining cuts by state refiners.

Agencies