Restrictions, weekend closures continue to ail retailing business

Localised lockdowns

Localised restrictions in various parts of the country have been the biggest hurdle for retail businesses since March. Although regions such as Delhi have lifted such curbs, others such as Maharashtra are yet to follow suit.

According to the former India head of an international apparel company, the retail business in Mumbai has been badly affected because most stores are still closed.

Maharashtra, which has almost a quarter of the country’s active coronavirus cases, has enforced a complete lockdown on weekends and hasn’t allowed shopping malls to open. Earlier this week, RAI appealed to the Maharashtra state government to allow malls and shopping centres to open.

“Malls are important for the economy and consumers alike as each mall employs over 4,500 people, accounts for over Rs 10,000 crore of business and over Rs 1,000 crore of GST. It is estimated that there are 50 malls in Maharashtra covering an area over 2 crore square feet,” RAI said in its plea to the state government.

According to Vineet Jain, COO of V-Mart Retail, though business has recovered to almost pre-pandemic levels in Uttar Pradesh despite weekend closures, the company is struggling in Bihar.

“Bihar has allowed the opening of stores only for three days in a week, which is hurting the business,” he said.

Odisha and West Bengal also have curbs in place and allow shops to open for limited durations.

What’s also different this year is that demand has been impacted in rural as well as urban areas, experts said.

“Due to interrupted access through the lockdown last year, consumption came back strongly on reopening. However, this time around we have not witnessed a similar spike, given the scale and severity of the second wave impacting employment and incomes thereof, which has led to a drop in consumption across both urban and rural areas,” said Joydeep Bhattacharya, partner and head of retail, Bain & Company, India.​

F&B leads recovery

While the overall retail sector struggles, there’s been a faster turnaround in food-related businesses such as quick service restaurants (QSRs), supermarkets and grocery stores.

The RAI survey showed an almost 90 percent recovery for QSRs from the pre-COVID period, with sales having declined only 10 percent in June. Sales in this segment had declined 70 percent in May, according to the survey.

The food and grocery segment reported a 7 percent drop in June, according to the RAI survey.

Sales in shopping malls in Delhi reflected this trend.

Pushpa Bector, executive director at DLF Retail, said July looks promising and there’s been a 60 percent recovery in the company’s business from pre-pandemic levels.

“Food and beverages segment has recovered. However, formal apparel continues to be a drag,” she said.

Retailers are now hopeful that the easing of restrictions and the upcoming festive season will bring back demand and aid the recovery.

“Across these multiple periods of lockdowns, we have come to realise that a store needs at least 45 days of unhindered operational time to get back to pre-COVID sales momentum,” Avenue Supermarts, which owns and operates DMart Stores, said earlier this month.

However, a possible third wave of infections could derail all their gains yet again.