Omnichannel retailers best placed to survive in India: report

High fixed spending and the lack of seasonal cash inflow are threatening retailers.

Omnichannel businesses are expected to be the retailers which are most likely to survive the pandemic crisis in India; and retailers with such an approach have better chances of survival due to the convenience and experience that they offer, according to a report from GlobalData.

As business operations in the country ceased completely, consumers have been gradually preferring the online mode to purchase goods and services. As such, the Indian e-commerce industry is expected to rise 141% from $46.2b in 2020 to $111.4b in 2025.

A first-quarter survey revealed that 84% of the consumers are still extremely or quite concerned about the impact of the COVID-19 pandemic. Reportedly, India recorded an 11-year high wholesale price index in April 2021, as India continues to reel under the second wave of the pandemic.

The unemployment rate in retail shot up by 8% in April (up by 1.5 percentage points from March) causing 3.4 million salaried employees to lose their jobs.

“The liquidity in the retail businesses is driven by seasonal sales and collections. However, high fixed expenditures and the absence of seasonal inflow of cash are threatening the existence of retailers,” GlobalData’s Retail Analyst Suresh Sunkara said. 

Against this backdrop, the impact of inflation of retail goods and the pandemic on the trading of retailers in India shows itself in various ways including store closures, the rise of independent retailer strength, the polarization of store sizes, and targeting of marketing efforts.

“In addition, with customers fearing contracting the airborne virus, retail stores and malls continue to witness a precarious drop in physical footfall. Hence, more retailers are contemplating layoffs and downsizing,” Sunkara said.

Still, the long-term outlook in the industry is optimistic and will benefit from rising income, favourable demographics, entry of foreign players, and growing urbanisation. “Meanwhile, Indian retailers should look up to their peers in China, Singapore, and South Korea to chart a quick road to recovery,” Sunkara added.