Looming third COVID-19 wave threatens India’s retail recovery

Indian retailers have been on tumultuous journey since March last year. The first COVID-19 wave in March had many retailers scrambling to survive as pandemic- led lockdowns dented most of their incomes. Just as they managed to survive the first wave and recover lost income by the fourth quarter of FY21, they were once again hit by the second wave in March in FY22. Currently, retailers face losses worth almost $30 billion, says Kumar Rajgopalan, CEO, Retailers Association of India. In a Money Control report Rajgopalan says, the impact of the lockdown has been felt by all retailers including those involved in food and grocery businesses.

Even malls have suffered losses worth Rs 3,000 crore, adds Shopping Centres Association of India. These retailers don’t expect business to revive in the first quarter of FY22 as consumers are likely to be cautious while spending money. They hope for revival only by the second quarter of FY22.

Curbs hit apparel sales

The RAI survey report released in May shows, though pandemic-led curbs hit the discretionary segment such as sports goods, footwear and jewellery the most, food and grocery segments also suffered. Grocery sales were hit hard as stores were allowed to operate for only limited hours, adds Rajagopalan. Footfalls at Reliance Retail, that houses supermarket chains Reliance Fresh and SMART, declined 35-40 per cent of pre-COVID levels in April, as consumers curtailed non-essential purchases.

Consumers also deferred apparel and footwear purchases. This led to only 15 per cent of the market being operational in May, says Ramesh Kumar Dua, Managing Director, Relaxo Footwear. The company operated only three of its eight production facilities during the lockdown period. However, reopening of factories in the fourth quarter helped double profits from Rs 51.80 last year to Rs 102 crore this year.

Retailers pin hopes on festive demand

To revive lost demand, retailers are once again looking to the upcoming festive season. They consumers to start visiting stores as festive season begin from Onam in August to Christmas in December.

Last year, they witnessed a good recovery post lockdowns and expect a similar experience this year too. Anand Agarwal, CFO, V-Mart Retail adds, retailers expect business to revive from Q2 and get stronger in Q3 and Q4. The early onset of Diwali and Dussehra will help recover lost business, opines Venugopal Nair, CEO, and Managing Director, Shoppers Stop However, this optimism may prove to be short-lived if India is hit by a third COVID-19 wave leading to a re-imposition of lockdowns, say experts.