Gujarat: 20% small retailers may shut down in six months

Niyati Parikh | TNN | Updated: May 5, 2020, 11:17 IST

The revival of demand in the retail sector will take time and thus will impact small traders

AHMEDABAD: With retail being among the worst affected sectors because of the nationwide lockdown, trade and retail bodies predict that at least 20% small retailers may be forced to shut down in the next six months. With shrinking demand, decreasing disposable incomes, changing consumer behaviour, and strict social distancing norms, the revival of demand in the retail sector will take time and thus will impact small traders.
“Small retailers don’t have deep pockets and sustaining overhead costs such as shop rentals as well as salaries of employees are a challenge with revenues reducing to zero during the lockdown,” said Jayendra Tanna, president, Gujarat Traders’ Federation (GTF). “After 40 days, government must provide some relaxation to resume business in a phased manner, otherwise small retailers will be forced to shut shop.”
Retail was as such reeling from a demand slowdown across sectors and the lockdown has added to the traders’ woes, according to experts. Kumar Rajagopalan, chief executive officer, Retailers’ Association of India (RAI), said, “Business will take time to bounce back. This is because consumers are facing an income shortfall and therefore, their purchasing power will weaken.” Rajagopalan went on to say: “Moreover, due to strict social distancing norms, the number of customers catered to in a day will come down significantly.” Rajagopalan said that retailers will take at least nine months to achieve bare minimum normalcy and the smaller players are likely to succumb.
In certain sectors, the revival time may be longer. Rohit Choksi, president, Jewellers’ Association of Ahmedabad (JAA), said: “The gems and jewellery sector will be adversely hit because it was already under recession due to the rise in gold prices.” Choksi said that currently the Covid-19 outbreak is the most widespread in the Walled City of Ahmedabad where the major markets are located. “At least 25% units will never reopen or soon shut down because jewellery is a luxury commodity and will be the last priority on people’s purchase list,” Choksi said.
Industry sources said manufacturers will face a demand slowdown and their production cycles will be hit.
“Unless items go off shelves, what will manufacturers produce?” said Arpan Shah, honorary treasurer, Gujarat Garments Manufacturers’ Association.