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According to Forrester Research, the Indian retail industry is estimated at $883 billion in 2020. The sector, one of the fastest-growing, however, took a massive hit amidst the second COVID-19 wave.

The industry has gone through numerous ups and downs in the last one and a half years, said Kumar Rajagopalan, CEO of Retailers Association of India.

During the nationwide lockdown, the industry clocked only 30 percent of business in a month, which rose to 70 percent of pre-COVID levels by Diwali.

With the second wave, this figure dropped to 50 percent in April 2021, and further declined to 20 percent in May. Kumar said these changes were categorical, wherein some categories of businesses did well, while some didn’t.

Interestingly, in the second wave, the essential services, too, were badly hit, which further brought down the numbers for the retail industry.

Due to COVID-19, every business has gone through deep scrutiny of all the costs involved in the business and the revenue generated in the process.

In fact, most businesses started looking at all possible channels to see if they could get any additional money in their pockets. For instance, a few small stores started looking at the entire country as their market instead of a particular region. This, he said, will have a long-lasting impact on the industry.

He highlighted that the ECLGS is given to every industry except retail. “Currently, we are banging the doors of the finance ministry and the centre to try and give us credit,” said Kumar.

Deep troubles for malls

Rajneesh Mahajan, CEO, Inorbit Malls, highlighted the difference in restrictions imposed by the states between the first and the second wave.

For instance, Gujarat or Telangana did not have a complete lockdown in any month. Maharashtra, on the other hand, had imposed a complete lockdown. 

He explained that when companies are fully open, retailers can effectively manage their costs. However, when they are partially open, it becomes difficult to sustain the business as they still have to pay for the infrastructure despite any consumption, thereby incurring a loss.

According to Rajneesh, the most important thing to do at the moment is to align the cash flows with the revenue. The infrastructure is permanent from the developer’s perspective, but there is no flexibility as its cost is fixed.

There needs to be a system where the variable cost matches the fixed cost, he said. “We are still looking at it as a temporary phase, and hence, I don’t see a major shift or a new model developing,” Rajneesh added.

A dark time for the entertainment sector

According to Kailash Gupta, CFO, Inox Leisure, the entertainment or cinema industry has seen one of the darkest times in its history. In March 2021, almost 30-35 percent of the business had started coming back to pre-COVID levels. However, the second wave of the pandemic led all the cinema outlets to shut shop yet again.

Now, almost 1,000 screens across India are shutting down permanently. “The industry has never seen such kind of downfall in the last 100 years,” said Kailash. 

For now, all expansion plans in the cinema industry has been put on hold. Kailash said while weaker players will be out from the industry, organised players will continue with business expansion.

“As an industry, there are a lot of challenges that have suddenly kicked-in in the last 15 months. This will probably continue for the next six to 12 months, but, post that, things will fall back into place,” he added. 

While generating content is not an issue for the cinema industry since almost 1,800 movies are released every year, the industry’s brand equity is important.

In terms of recognition and responsiveness, cinema still stands superior to OTT platforms or television. Thus, he said, OTT platforms are not a threat to the cinema industry.

The way forward

Digital commerce is going to be an important part of the industry, claimed the CEO of the Retailers Association of India, adding that physical retailing will not be obsolete.

The businesses will have to reorient themselves and evolve to enhance the experiences of the customers, he said.

Rajneesh, too, shared the same belief, saying weaker malls might face some pressure for sale, but the performing malls will continue to be on a safer side.

Nevertheless, in the last three to four weeks, a good recovery rate of consumption was noticed, which indicated that things might change for the better. 

“I am very hopeful that in the next six-eight weeks’ time, we should be anywhere between 85-90 percent of recovery of the pre-COVID times,” he concluded.