Even as there are rumours of partial lifting of the lockdown at the end of the 21-day period on April 14, there is really no clarity as yet on what steps the government may take on resumption of operations of various segments of business. Among those expressing their worries is the fashion retail sector. Voices from this segment are growing and they want the government to intervene and come up with some sort of a relief package in the absence of which there is a real threat of many retailers going bankrupt.
Many of them say that the closing down of their shops for 3 weeks has meant there has been no income but their liabilities like rent, salaries to employees etc. have to be paid. They are also referring to the millions of jobs the sector provides and how they will all be lost if the government does not come to their aid.
One of them has put a figure on the losses at $30 billion for the retail business alone for the fortnight gone by and extrapolating this figure could reach as high as $700 billion for six months if the situation does not dramatically improve. These figures may warrant a scrutiny but it cannot be argued that the current lockdown and if it continues for another month or two can put many retailers out of business. Unlike some of the developed economies, the profit margins in the retail business is India are limited due to high competition. While large cities may offer more volumes, the cost of real estate is equally higher in the cities. A lockdown situation for 2-3 months may mean the recovery period could run into years; this is for those who manage to survive.
Within the fashion retail business, there is also the fear of obsolescence. The retailers are now hoping that the apparel players will moderate the release of new designs etc. this year so that the old stocks could be cleared first. Some of the smaller retailers may resort to panic selling at throwaway prices to generate some liquidity and that itself could pave the way for sickness in them.
It’s going to be a rough road ahead for the Indian retailers. They are looking up to the government for a bailout package.