#BreakTheChain Order by Maha Government Calls Out a ‘Lockdown for the Retail Industry’ in the State.
Retailers Association of India (RAI) appreciates the step taken by the Government of Maharashtra to curb the spread of the second wave of the pandemic. While the situation in the State looks grim and implementation of stricter rules is necessary, it is also important to calibrate a balance between lives and livelihood. Complete shutting of retail businesses other than essentials will impair the ability of retail and allied businesses to survive.
Calling it a ‘Retail Lockdown’, Retailers Association of India (RAI) raises concerns about the #BreakTheChain order by the Government of Maharashtra on the evening of April 4, 2021 as it once again brings a majority of retail businesses to a complete halt. Retail businesses of non-essential goods are feeling discriminated for being pressed by restrictions and lockdowns without any respite from the Government.
Speaking about the challenges being faced by retailers of non-essential merchandise, Kumar Rajagopalan, CEO, Retailers Association of India (RAI) said “The retail industry will again start experiencing severe liquidity challenges due to the ‘Retail Lockdown’ in the State, while the fixed operating costs remained intact. It is expected that the retailers pay electricity bills, property taxes, among others in spite of being shut. The new order will have a contagion effect on the entire retail ecosystem in the state and across the country majorly impacting manufacturing and employment of millions.”
Nearly 60%-70% of costs are fixed costs. This, along with low margins, leaves businesses with limited flexibility. Rents and salaries to employees make a large part of this cost. Large capital is invested as working capital as it is a long lead time industry. As most of this is borrowed capital, retailers are already finding themselves in a deep liquidity crisis. Though the manufacturing sector is permitted to operate in the State during this time, they will be unable to get orders since retail is shut.
There is a sense of discrimination that is prevailing as online retail for non-essentials goods are being permitted to operate, while physical retail is not. RAI has been highlighting the fact that formal retail spaces are controlled spaces and have SOPs in place. They have got the ability to adhere to hygiene standards and can definitely ensure social distancing, as compared to local markets.
While the order mentioned that the stores cannot be opened until all employees get vaccinated, there has been no recognition of retail employees as frontline workers or prioritising there inoculation. Nearly 90% of frontline retail workforce is less than the age of 45 years. Retailers Association of India (RAI) has appealed to the Ministry of Health & Family Welfare to consider prioritising vaccination for the frontline retail workers that face hundreds of people in the course of dispensing their duties and run the risk of getting infected. These includes individuals engaged in the supply, retail and delivery of products across all channels of retail. This will not only benefit the retail industry but also benefit the public at large who continue to rely on the frontline retail workers for their daily needs.
India will always be a consumption Economy, and strain on the retail industry cripples the entire value chain, which involves manufacturing, entertainment, right down to artisans and other micro-enterprises, leading to layoffs and downscaling or even shutting down operations widely.
Removing roadblocks at the local level will not only help retailers to plan ahead, but will also help them make decisions on hiring. It will also help the exchequer in the form of taxes collected by the State Governments like GST, among others which is important to help revive the economy. Most importantly, it will be in the interest of consumers as it will bring convenience to them.