Focusing on health and well-being of citizens, physical and financial capital and infrastructure, inclusive development for aspirational India, innovation and R&D, minimum government, maximum governance are some of the highlights of the Union Budget for the financial year 2021-22.

Finance Minister, Nirmala Sitharaman allocated Rs 15,700 crore for the Ministry of Micro, Small and Medium Enterprises (MSME) sector. She also proposed to reduce the money requirement under the Stand Up India scheme for the Scheduled Castes and Scheduled Tribes from 25 per cent to 15 per cent besides approving loans for activities in allied activities in agriculture.

Scheme for new textile parks

In view of global pandemic, the Budget also introduced a new scheme for setting up mega textile parks in the country. These parks will help the government position India as a fully integrated, globally competitive manufacturing and exporting hub for the sector.

Under this scheme, the government has sanctioned 59 integrated textile parks, of which 22 have been completed. The textile ministry also plans to set up a Mega Integrated Textile Region and Apparel (MITRA) Park, spread over 1,000 acres with state-of-the-art infrastructure, common utilities and Research and Development (R&D) lab. The government has also approved production-linked incentive (PLI) scheme for 10 key sectors including textile and automobiles which would help India become self-reliant, boost manufacturing and enhance exports. The scheme takes the total government outlay for such incentives to nearly Rs 2 lakh crore over a five-year period.

Apparel and denim maker, Kewal Kiran Clothing reported a six per cent decline in net profit to Rs 11 crore ($1.5 million) in the quarter ended December 2020, as against Rs 12 crore it reported in the corresponding quarter last year.

According to a brand statement Covid-19 outbreak across the globe and in India has resulted unprecedented steps to combat it. Consequent to the nationwide lockdown from March 23, 2020, the company had to shut clown factories and stores and all operational activities across locations, impacting the business during the quarter.

Kewal Kiran owns brands like Killer, Integriti, LawmanPg3, Easies, and Desi Belle. The company currently has 336 retail stores 210 cities across 25 states and sells on leading e-commerce platforms across India.

Jeans brands Lee and Wrangler are planning to transform their India businesses into omni-channel entities. This is being done to drive growth and double sales over the next two years by extensively focusing on online channels. The US-based Kontoor Brands is moving Lee and Wrangler business from a fully owned Indian subsidiary to a franchise model. The company has signed a licensing deal with Bengaluru-based Ace Turtle, which provides ecommerce solutions to traditional retailers.

Kontoor is also looking to shut a few stores in India and focusing on rapid growth of fashion products online. The decision to partner Ace Turtle in India is part of a strategy to adapt to a market that is increasingly online and ensure the brands are accessible to customers across the country through a combination of ecommerce and physical stores.

The partnership comes at a time when fashion and lifestyle brands including Puma, Levi’s and Jack & Joes have reported doubling online businesses, as consumers avoided malls and high streets amid fears of Covid-19. Retailers said the pandemic has leapfrogged their online sales by five years and much of the growth is there to stick.

In coming months, Ace Turtle will upgrade store technology to expose the brick-and-mortar inventories on upcoming Lee and Wrangler webstores, as well as on ecommerce sites like Flipkart, Amazon and Myntra.

Lee and Wrangler currently source almost 90 per cent apparels from within India and Ace Turtle plans to increase local sourcing to about 95 per cent within a year. The supply chain will be ramped up towards omni-channel retailing with a quick turnaround time as per online demand.

With the pandemic devastating several businesses and industries in 2020, many retail and offline players are offering customized services online like the Cloud, etc. Prominent amongst these is The Pant Project which offers customized trousers at reasonable rates. Each trouser is personalized according to customers’ measurements and their unique styling preferences. They can choose between slim, tapered and regular (relaxed) fit to find a pair of pants that fit perfectly to their body type.

The customers can add a personal touch to each of these trousers and have their initials monogrammed onto the trouser at no additional cost. The Pant Project also provides free consultation by their personal stylists before and after purchase, where clients can consult the stylist on the ideal fabrics, fits, styles and customizations as per their needs.

Similarly, Delhi-based NAAZ- The Designer Boutique offers consultation services virtually through the digital medium. The boutique provides customers with a demo picture and the size chart as well. The products are made to order and of particular sizes and requirements.

Textiles major Raymond’s board has approved raising upto Rs 200 crore through non-convertible debentures (NCDs) on a private placement basis. A meeting of the committee of board of directors of the company was held recently. The committee of directors at the said meeting have approved the issue of non-convertible debentures for an amount up to Rs 200 crore on private placement basis," Raymond informed in a regulatory filing.

Year 2020 was a tough one globally for people and businesses alike. With long stretches of lockdowns, and people confined at home, life almost came to a standstill. However, with the successful launch of a few vaccines there is some hope and positivity in our fight against the global pandemic. The Economic Times took stock of the damage that COVID-19 inflicted on the country’s shopping malls and concluded “With some confidence, we believe, is that a significant amount of the ground lost by shopping malls in India during the lockdown has already been recovered.” However, the report did highlight its little early to come to clear date of return to “normalcy” for shopping malls or what the new normal will look like.

Malls on way to recovery The report relied on personal mobility data or device data from smartphone usage. ThisShopping malls slowly recover as footfalls inch towards pre Covid levels real-time data gives an insight on changes in visitation patterns. While GapMaps device data gives clear understanding of the impact on footfalls – both before the lockdown and in the various phases of unlock.

The aggregate findings from 24 leading malls across India, most of them in Tier-I cities shows quick drop in footfalls in all malls across cities to zero or almost zero in the weeks starting March 23, due to the lockdown. This continued till mid-June when traffic started moving north after partial unlock. And the festive season, saw footfalls reach 60 to 70 per cent of pre-COVID levels in some malls. And in mid-November, levels were trending at 30 to 60 per cent of pre-COVID levels.

The data also reflects as customers returned, their visitation habits and the duration of visit, slowly picked up to pre-COVID levels on an average 80-90 minutes in most cases, compared to 50-60 minutes in March and June.

Local malls were the preferred destination

One global trend that has emerged from the lockdown is that shoppers are now more inclined to focus on shopping centres closer home. The Economic Time report suggests, “for regional malls, which typically thrive when able to attract customers from a broad region, this change in behaviour, if permanent, spells potential problems.”

The study also highlights the pandemic changed the mindset of shoppers on the distances they are willing to travel. In most cases only 15 to 30 per cent regional mall customers travelled two kilometres or less in April, which went up to 50 to 60 per cent. However, in October, the proportion went back to almost pre-COVID levels where customers were more confident to travel greater distances to visit their favourite malls.

The pandemic has brought in a shift in consumer behaviour, providing a major fillip to India’s e-commerce industry that is now poised to touch $90-100 billion in the next 3-4 years. While challenges brought in by the pandemic impacted businesses, many new avenues also opened up.

The opportunities that modern retail present are significant for businesses of all sizes, including the kirana ecosystem. E-commerce platforms are also doing its best to help small businesses and artisans embrace the power of technology and be a part of the modern retail opportunity.

E-commerce has been gaining traction over the years and in 2019, more than 10 per cent Indians had already shopped something online. This trend was further accelerated after the lockdown forced people to stay indoors. Many turned to online platforms for buying grocery and other essentials during this time and have continued to do so after the lockdown was lifted.

Almost 100 per cent pin codes in India have seen e-commerce adoption. This includes categories like fashion, appliances, furniture, etc. More than 60 per cent of transactions and orders in India come from tier two cities and smaller towns. Industry experts still believe that they are scratching the surface when it comes to e-commerce adoption in India. Out that only 3.5 per cent of Indian commerce is online as compared to more than 25 per cent e-commerce adoption in China, and other developed economies that have 10-25 per cent adoption rates.

COVID-induced spike in e-commerce has actually changed several categories, there is a new normal. And the meaning of essential categories has also completely changed. It is believed that Indian e-commerce economy has seen a permanent shift for the positive.

Over the next few years, Indian e-commerce economy will be bigger than modern retail today. The pre-COVID growth rates of e-commerce were roughly 26-27 per cent but if you look at the post-COVID estimates, it has gone closer to 30 per cent. In the next three to four years, what the industry was estimating the e-commerce market size was roughly in the range of about USD 50-60 billion, today, the same numbers are actually close to USD 90-100 billion.

In response to increased public health concerns with on-going pandemic, lifestyle and fashion brand Roadster launched clothing and footwear made from anti-viral textiles. The brand has also expanded its product selection to launch a line of Augmented Reality Tees.

Roadster’s new line of AR T-shirts was developed by fashion e-commerce platform Myntra’s Innovation Labs design team. The new range of graphic tees feature a readable AR code which people can scan on the Myntra app on Android phones to bring the graphic to life with sounds and visuals designed to give the experience of being on the road.

The collection features six different scannable designs and the 100 per cent cotton T-shirts. The collection is designed to engage wearers, encourage them to use the Myntra app, and promote Roadster’s identity as a brand for riders. The anti-viral clothing line launched by the brand also includes footwear made from anti-viral textiles designed to kill 99.4 per cent of viral infections they come into contact with. The line features jackets, t-shirts, sneakers, and sweaters among other garments.

Roadster also embraced the shift to virtual events in the ‘new normal’ by holding an online music contest ‘Roadster Ok Please’ last year.

Almost a year after business was severely hit by pandemic-related disruptions; Future Group CEO Kishore Biyani expects normal sales to return by the end of January. The group, which operates popular retailing formats Big Bazaar, FBB, Central and Nilgiris - has seen sales touching almost 60 per cent of pre-COVID levels and that business has normalised to great extent.

Future Group, which entered into a Rs 24,713-crore deal with Reliance Industries to sell its retail business, has also received large orders from Jio Mart that is helping the retail major chart a strong comeback. Future Group companies and promoters together have a debt of over Rs 20,000 crore. On inventory position and stocks, Biyani has informed the stocks in stores are almost up to 80 per cent of what they were before the pandemic. However, it could be a while before the days of packed retail stores return.

Last month, CEO of Big Bazaar, Future Group hypermarket, Sadashiv Nayak had said the number of visitors in stores is increasing and during the festive season all sections, including apparels and garments, recorded good sales.

Future Group embraced the digital route to reach out to customers. Various retail brands under the Future Group have turned to shopping apps, WhatsApp and even phones to receive orders and deliver them to customers. The concept of 'pick up at stores' has also gained traction. Like previous years, Future Group is also gearing up for its annual sale event "Sabse Sasta Din" on January 26. Biyani expects a significant jump in footfalls during the event. Future Group firms have started getting large orders from Reliance Industries for its FMCG arm Future Consumer as well as supply chain and logistics company Future Enterprises.

And IBEF report suggests India is the world’s fifth-largest global destination in the retail space. The entry of top players has made the sector one of the most dynamic and fast-paced with total consumption expenditure expected to be worth $3,600 billion by 2020 from $1,824 billion in 2017. It accounts for over 10 per cent of the GDP and around eight per cent of employment.

As per United Nations Conference on Trade and Development's Business-to-Consumer (B2C) E-commerce Index 2019 India stood 73rd and is the fifth largest global destination in retail spaces; 63rd in World Bank’s Doing Business 2019.

A promising and growing market

The IBEF report highlights India’s retail sector was worth $950 billion in 2018 growing at CAGR of 13 per cent and it is expected to reach $1.1 trillion by 2020. Online retail sales were forecasted to grow 31 per cent annually to $32.70 billion in 2018. Revenue were projected at reach $60 billion by 2020.

Revenue from brick and mortar retail was expected to reach Rs 10,000-12,000 crore ($1.39-2.77 billion) in FY20. And as per consulting firm RedSeer’s study the retail sector was expected to recover 80 per cent of pre-Covid revenue ($780 billion) by end-2020. In fact, after a 19 per cent drop in the January-March 2020 quarter, the FMCG industry recovered in July-September 2020 quarter with a y-o-y growth of 1.6 per cent.

As per Department for Promotion of Industry and Internal Trade from April 2000-June 2020, the retail sector received FDI equity inflow worth $ 2.17 billion. In 2019 PE funds worth $970 million were channelled to the retail sector. Many global PE funds have been attracted by Indian retail for example, in September 2020, US private equity firm Silver Lake announced plans to invest Rs 7,500 crore ($1.00 billion) in Reliance Retail, the second billion-dollar investment by Silver Lake in a Reliance Industries subsidiary after the $1.35 billion investment in Jio Platforms in 2020. Walmart Investments Cooperative invested Rs 2.75 billion ($37.68 million) in Wal-Mart India.

And what given the sector an edge are the various government initiatives to improve the industry. One of these is allowing 100 per cent FDI in online retail and services through the automatic route, thereby providing clarity on the existing businesses of e-commerce companies operating in India.

As ecommerce expands in the country, retailers need to leverage digital channels, which would push them to spend less on expensive real estate while reaching out to more customers in smaller cities. By 2021, traditional retail is expected to hold 75 per cent share with organised making up 18 per cent and e-commerce 7 per cent of the total retail market. The long-term outlook for the industry is positive, with rising income, favourable demographics, entry of foreign players, and increasing urbanisation, sums up IBEF.

India is considering revising its foreign investment rules for e-commerce, a move that could compel players, including Amazon, to restructure their ties with some major sellers. The discussions coincide with a growing number of complaints from India's bricks-and-mortar retailers, which have for years accused Amazon and Walmart-controlled Flipkart of creating complex structures to bypass federal rules.

India only allows foreign e-commerce players to operate as a marketplace to connect buyers and sellers. It prohibits them from holding inventories of goods and directly selling them on their platforms.

Amazon and Flipkart were last hit in December 2018 by investment rule changes that barred foreign e-commerce players from offering products from sellers in which they have an equity stake.

Now, the government is considering adjusting some provisions to prevent those arrangements, even if the e-commerce firm holds an indirect stake in a seller through its parent. The changes could hurt Amazon as it holds indirect equity stakes in two of its biggest online sellers in India.

According to a statement given by Amazon, e-commerce created huge job opportunities and is a significant contributor to economic growth. Any major alterations to the policy will adversely impact small- and medium-sized businesses. India's e-commerce retail market is seen growing to $200 billion a year by 2026, from $30 billion in 2019, the country's investment promotion agency Invest India estimates.

Among other changes, the government is considering changes that would effectively prohibit online sales by a seller who purchases goods from the e-commerce entity or its group firm, and then sells them on the entity's websites. Under existing rules, a seller is free to buy up to 25 per cent of its inventory from the e-commerce entity's wholesale or another unit and then sell them on the e-commerce website.

Sports retail chain, Decathlon, plans to shut its Sardar Patel Ring Road store in Ahmedabad, launched seven years ago. This was “country’s biggest sports store” on January 15. “The operations of this store will be merged with those on CG Road and Motera in Ahmedabad,” said an official from the Decathlon sports store that was operating from a pre-engineered building provided by city-based builder Goyal & Co.

The buzz is footfalls at the store had dropped, especially after the pandemic, and the store was unable to sustain. As the first Decathlon store in Gujarat launched in 2013 it was also the largest outlet in the country, spread over 90,000 sq. ft with a generous playground and a huge parking space. Apart from Ahmedabad, Decalthon also operates stores in Vadodara and Surat in Gujarat. The closure of Decathlon store reflects the struggle being faced by the retail sector, especially those operating out of malls and shopping complexes in Ahmedabad where vacancy levels are as high as 75 per cent and rentals have dropped 10-15 per cent, post-Covid outbreak.