It will will take a year to revive, predict top industry associations .
In a webinar, organised by Trust for Retailers & Retail Associates of India (TRRAIN), the three associations jointly anticipated a 25-30% impact on business with multiplier effect on subsidiary industries and lasting job losses. A survival plan is the need of the hour, they said.
“The government will support only for 3-4 months but cannot run the business for entrepreneurs for 9-12 months. I don’t see actual manufacturing to commence before 2-3 months. Most retailers will hesitate to take fresh stocks till festive season. Subsidiary industries such as zips and and tags will also be adversely affected. Fresh production will probably start in July-August period,” said Rahul Mehta, chief mentor of CMAI.
Selling piled-up inventory as soon as malls and stores reopen followed by increasing the number of units produced per machine at the factories would be key to recovery for apparel manufacturers in post Covid era.
It may take six months for the larger companies to revive and 12 months for the smaller retailers. Retailers are sitting with six months of unsold inventory,” said Kumar Rajagopalan, CEO of RAI, adding, “Reworking of congregation areas and queuing at malls are being relooked as safety will be top consumer demand in the recovery stage."
Apparel manufacturing industry has 12 million employees with 7 million in the domestic sector while retail as an industry has 46 million employees out of which 6 million are in modern retail.
India is currently under complete lockdown since PM Modi announced it on March 24 due to the Covid-19 outbreak resulting in retail companies earning zero revenue. Currently, retailers selling discretionary products from apparel to lifestyle are neither allowed to open stores nor sell online.
Job losses and salary cuts across sectors amid the pandemic will also severely impact the hospitality sector. “People will not step into bars and pubs as they are typically crowded with social distancing becoming the new normal. Even discretionary spend will reduce,” said Anurag Katriar, president of NRAI.
Mass exodus of migrant workers amid the pandemic could add to the delay in revival once the lockdown is lifted. The restaurant industry has 7.3 million employees in the country.
The three associations have been approaching the government with representations to help the sectors tide over the three months with money to pay employee salaries and working capital to keep businesses afloat. BS Nagesh, founder of TRRAIN, said, “In these hard times, consumers have to become part of the value chain. Once we go into revival stage, PM Modi should urge Indians to come together and celebrate the end of the crisis by spending even on discretionary products.”