New Delhi, 30 April 2020 : COVID-19 a.k.a. The Novel Coronavirus is one of the biggest global crises which compels us to imagine a world completely changed in its wake. The severity of the situation brings with it uncertainty about the future and a need for a fundamental shift in approach. The pace at which Covid-19 is affecting people and the world economies is a historical chaos that looks to bring a major change in the way businesses function from hereon.
Collectively as a nation, India is battling the pandemic by adhering to globally successful preventative strategies of containment, such as a nationwide lockdown and by enforcing strict social distancing and proactive contact-tracing to control the spread in our country.
As a contributing factor we at Ethnicity stand in solidarity for every person and every nation affected by this catastrophe and we have taken some key measures to fight this shared challenge.
We have been closely monitoring the situation and are in constant contact with our team and retail fraternity across the country as the well-being of our patrons, colleagues and communities are our topmost priority. Our decisions are made in accordance with the World Health OrganisationтАЩs precautionary measures to avoid contamination and our Government authoritiesтАЩ rules to ensure safety. As a means to respond to the rapidly changing situation at hand we have taken the following steps collectively as a brand:
– We have temporarily closed all our retail outlets and our head office to minimize the risk of exposure and urged our team to stay indoors.
– We have rolled out work-from-home facilities and digital collaboration alternatives to minimize in-person meetings whenever possible.
– We have temporarily shut down our warehouse and our orders on our ecommerce portal to ensure all our staff are safely confined to their homes.
– We are offering flexible return dates and extending our return policy to cover the period of store closures until stores reopen.
The effect of this pandemic and the subsequent lockdown has resulted in an enormous setback to the Retail Industry. While the industry is committed to ensure the safety of billions of people, some challenges faced in the current time is of large magnitude. Due to mandatory closure of retail stores across India, retailers face imminent financial crises and insolvency, with stores at risk of shutdown and millions of job losses.
The Indian Retail industry is one of the largest employers in the country, with more than 15 million retailers, both big and big within traditional and modern trade. The industry employs 40-50 million Indians directly, of which modern trade employs more than 6 million Indias and our contribution being approximately 40% of IndiaтАЩs consumption.
Nearly 60 to 70 percent of costs are fixed costs in the retail segment. Rents and salaries to employees, make a large part of this cost. This, along with low margins, leaves businesses with limited flexibility. With stores and ecommerce businesses being shut, we have seen a 100% fall in revenue. Economists predict that consumption will further fall by 25-30% for the next 6 to 9 months post the lockdown revision, which in turn will amount to insurmountable losses for this industry. Our industry which was already hit by the economic slowdown, is now at threat from Covid-19, with losses which are hard to ascertain.
The current situation will lead to down scaling or shutting down operations widely and the closure of retail businesses will affect large sections of society. Our industry is people intensive, with over 90 percent of retail employees working at the stores, earning minimum wages and living a hand-to-mouth existence. With extended closures, these employees are at risk of being retrenched. With the closedown the entire value chain made up of distributors, manufacturers, raw material suppliers, etc. will have order cancellations and loss of income. This along with projections of extended slowdown in retail consumption, will be a huge stress on the entire supply chain. We have written to the government seeking support at these times of crisis to help our industry survive the aftershocks of COVID-19. The industry requires special support from RBI and the Banking industry; due to high inventory positions and low demand that will continue beyond the lock-down period the industry will need sustained support to survive.
Banks must be mandated to extend the moratorium to 270 days for payment of instalments & interest of term loans, short-term loans, corporate loans, securitized loans, bonds, mortgages, debentures and general purpose loans effective from 15th March 2020 to 31st December 2020. Banks should provide 25% additional Working Capital credit lines, to tide over this shortfall due to no-revenues. This support is critical for companies to pay their salaries and wages on time.
Interest subsidy and default relief; Interest Rates on all loans to the Retail Industry needs to be subsidized or reduced by 400 basis points from 15th March 2020 to 31st December 2020. Reserve Bank of India is requested to relax NPA reporting guidelines till 31st March 2021.
Relaxation in Statutory Payments and Accounts; The period for depositing all statutory dues, like Income Tax, Advance Tax, GST, ESIC, PF etc. for payments due upto 31st July 2020 should be increased by 90 days with extension of the mandatory reporting/statutory filing days by 60 days to 31st July 2020 for financial accounts for year 2019-20.
Employment Support; the Retail Industry needs fiscal support to ensure no job losses in the trade. To avoid lay-offs, we have requested a 4-month (March 20-June 20) job support subsidy at 50% of the minimum wages as cash.
With hope that the Government will give adequate consideration to the concerns highlighted by the Industry, we shall overcome the probable adversities due to the corona outbreak which may cause unprecedented hardships to the retail industry.
As I write this today, I want to emphasize the importance of being safe during this global pandemic, but also offer a sense of unwavering optimism for the future. How we each respond at a time like this is a reflection of who we are and what we stand for. At Ethnicity, we will continue to put our customers first and offer complete transparency, because weтАЩre all in this together. Stay in. Stay Safe.
