Friday, 12 June 2020

Degrowth rates peak, lockdown relaxations ineffective for

Degrowth rates peak, lockdown relaxations ineffective for 
retail, reveals RAI business survey


No industry or individual has escaped unscathed from the lockdown, and retail lies at the very intersection. A recent survey by the Retailers Association of India (RAI) of more than 150 retailers – big and small, revealed that lockdown relaxations have done little to relieve the pain of the sector. A business assessment for 3 months between (March, April and May 2020) shows severe degrowth in businesses across sectors and regions. During the stringent lockdown in April 2020 and May 2020 retailers lost around 80 - 90% of their last year sales.

The relaxations provided by government in May 2020 were ineffective as retailers across the board continued to lose. Large size retailers (>300cr sales) in the food and grocery segment have witnessed 86% degrowth in business, while the non-food and grocery segment has seen a 75% degrowth compared to last year. Small and Medium sized Retailers (<300cr sales) in the Food & Grocery segment fared slightly better but still lost 33% of their sales in May compared to last year.

The survey also revealed that lockdown relaxations have been ineffective in stimulating retail across geographies as all regions have impacted almost the same with degrowth of 76% to 81% in May 2020 Y-o-Y.

This degrowth across retail businesses is consistent with the findings of the RAI consumer sentiment survey (link), launched last week, where a majority 67% consumers showed little to no excitement in shopping post the lockdown, citing safety and hygiene as their biggest concerns.

Interestingly, the business survey further shows that beauty and wellness, footwear and apparel and clothing were most impacted even as they featured as top preferences in a consumer’s shopping wish list (as per RAI’s ‘Unlocking Indian Consumer Sentiment Post Lockdown’ survey in association with LitmusWorld) The Beauty and Wellness segment witnessed a slump of -75% degrowth, followed by footwear at -67% and apparel and clothing at -66%.

Commenting on the findings of the business survey, Kumar Rajagopalan, CEO, Retailers Association of India said, “Retailers are amongst the most resilient entrepreneurs of the Indian ecosystem. Despite the lockdown relaxations, retailers are still facing a challenging time to revive their business. The impact on retail across the country is concerning and it will take a considerable amount of time for retailers to return to the green. We trust the Government and other stakeholders will take note of this situation and help in boosting customer sentiment by enabling smooth functioning of retails stores across the nation by addressing state and local level issues.”

The trend was largely similar across turnovers as the industry lost 40% sales in Mar 2020 followed by 70 - 90% losses in April and May 2020 compared to the corresponding year last year.

The survey reveals a very grim picture of the impact of the pandemic on retail business. Considering consumer sentiment, the road to recovery appears to be a long one. What is needed is support from the government and a revival of consumer confidence.

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