Retail industry struggles to recover, shows 64% contraction in early July

Even as the Finance Ministry beats the trumpet of recovery coming back later this year, the retail industry continues to face hurdles across the country making recovery all the more distant. The retail sector, which employs close to 50 million, has reported 64% degrowth during the first fortnight of July, a marginal improvement compared to 67% in June. The retailers are facing huge operational setbacks due to ad-hoc local lockdowns leading to supply chain and staffing issues.

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A few categories such as Food & Grocery and Consumer Durables have shown some signs of improvement. Other categories such as apparel & clothing, footwear have reported 74% Y-o-Y decline in sales, while jewellery, watches and personal accessories segments have witnessed 78% degrowth during the first half of July, according to data gathered by Retailers Association of India. The Indian retail industry comprises around 15 million traditional and modern retailers.

"It has been a grim start to the second quarter of FY21 with retailers facing huge operational setbacks due to ad-hoc local lockdowns creating confusion and leading to supply chain and staffing issues. Supply chain and operations need to smoothen up to ensure that the upcoming festive season brings back the much-needed impetus to sales recovery," Kumar Rajagopalan, CEO, Retailers Association of India (RAI) said.

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In the first half of July, food & grocery and consumer durables segments have shown improvement in sales over June and reported much lesser decline at 45% and 30% respectively, compared to the same period last year.

RAI's survey among its member retailers shows that all regions are equally beaten for sales growth with East contracting by 62%, West at 69%, North at 68% and South at 58% contraction in the first half of July 2020 on a Y-o-Y comparison.

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Local lockdowns and ad-hoc restrictions imposed in UP, Maharashtra, Andhra Pradesh and Karnataka are making a distressing impact on the retail businesses and on consumer sentiment, Rajagopalan said.

During the first fortnight of July, the furniture and furnishing category witnessed 63% contraction in sales, while the sports goods segment contracted by 68%, beauty, wellness and personal care reported 71% decline. The quick service restaurants category reported 73% decline compared to the corresponding period in 2019.