A quarter of retailers may shut shop without capital infusion: Experts

Assuming the Covid-19 crisis lasts through AprilMay, and not beyond, modern retailers will take nine to 12 months get back to their normal business volumes. However, almost 25 per cent of modern retailers will go out of business, if they do not receive additional capital during this crisis period.

"Retailers expect that they will take nine to 12 months for recovery if the crisis ends by April-May. However, they don't have (any) outlook on what could be the broader picture if the crisis continues beyond April-May," said Kumar Rajagopalan, CEO of the Retailers Association of India, addressing a webinar.

According to Rajagopalan, 25 to 30 per cent of the retailers need serious infusion of capital. Else, at least 25 per cent of them will have to shut shop. Only 7 to 8 per cent of the modern retailers are now operating to sell essential items. The remaining 92 to 93 per cent have zero income since the lockdown. Even before the lockdown, most of the retailers were operating with 80 per cent less sales compared to regular days.

Almost, 50 per cent of the retailers foresee that their revenues this year will come down to as low as 15 per cent of what they had earned last year, Rajagopalan said.

The size of modern retail in India is around $92 billion. Indian modern retail has 15 lakh stores and employs 60 lakh people. Lower revenues can also lead to job losses of up to 20 lakh in the retail sector.

Pinakiranjan Mishra, partner and national leader, consumer products and retail, EY India, too believes modern retailers will have to be satisfied with 25 to 30 per cent revenues this year, provided there are no massive job losses across sectors. "Retailers have already written off the June quarter. If jobs are secured, consumers can purchase and the recovery will be faster," he said. Retailers selling non-essential discretionary items will still take longer time to recover, he said.

"The government has to step in and bear a part of the pain. If the government is able to put more money in the hands of consumers, the outlook can be much better,' Mishra said.

According to experts, Indian has committed only one per cent of the GDP for stimulus against 10 per cent by the US. "In terms of fiscal stimulus India is at the bottom most. More has to be done on stimulus. The government has the capacity to do so. Oil prices are low and no opposition is bothered about the fiscal deficit. The government should bring in more money and print more rupee. The dollar rates might go up. But we are living in India. At this point we need not worry about it," said Anuj Puri, chairman, Anarock Property Consultants.