Coronavirus effect: More than 25% retailers may go out of business without govt intervention, says Retailers Association of India

"The bigger challenges

Biyani said that e-commerce and home delivery services of non-essential items are likely to restart April 20 onward. All services deemed non-essential are currently shut.

“E-commerce or home delivery business across non-essential

"However, that is a still very small share considering the fact that retail stores and malls don’t seem to be on the agenda to get opened up till May 3 or May 4 and that is definitely a huge concern.”

Rajagopalan painted a grim picture of the state of affairs in the retail business, saying that businesses operated at a mere 25 percent capacity.

“In February most of the retail businesses had only about 20-25 percent of their business being achieved. March has been low for most of the retailers, hardly 10 percent of the business and for non-food businesses there has been hardly any business.

"Retail is everyday cash business. Also, it works with the 85 percent of the total expenses, they have to pay salaries which is a big chunk and retail is the second largest employer in the country with more than 46 million people working in retail and also huge amount of money for rents, there is a significant amount of money that gets spent on various other things like utilities and stuff like that. Most of these expenses are still to be paid by retailers. So this is where retailers are currently standing.”

On the question of retailers bouncing back post COVID-19 crisis, Rajagopalan said, “We have done a research with 800 of our key retailers all across the country. The research that has come back to us is that almost 70 percent of them believe that it is going to take more than six months to come back to any level of normalcy. Twenty percent of them believe that it will be more than one year to come back to the level of normalcy. At this rate, the expectation is that above 25 percent of the retailers will buckle down and cannot be resuscitated unless there is some government intervention coming in.

“Our expectation is that one has to make sure that retailers survive, 46 million people are brought back into the system to take things forward. However, 20-25 percent of the retailers believe they will not last these six months.”

Biyani emphasised on the need for the government's intervention to help the retail industry get back on its feet. 

“This is a Black Swan event something that you are not likely to have in a lifetime again. These are unprecedented times and we require unprecedented solutions and I don’t think that the industry can find solution on their own.

"The industry can collaborate with the government to ensure the fact that the jobs are secured, industry can collaborate to ensure that the value chain continues to chug along by ensuring the fact that the retail stores continue to remain operational. If you focus on the biggest cost that the retailers incur, it is the rentals. That is where the biggest intervention is required and it is not about a waiver or investment, I think a moratorium for a period of 12 months could ensure the fact that the cost of rent for retailers would come down for that 12 months before the business starts limping back to normalcy.

"That is an ask which the shopping centers want, multiplex operators want, the restaurant operators want and all retailers want. This is something that we have to work with the government and the Reserve Bank of India (RBI) and the lenders etc to get this done,” Biyani concluded.