'Retail lockdown' in Maha to hit businesses, cash flow: RAI

Retailers Association of India (RAI) on Monday termed measures announced by the Maharashtra government to combat the surge in COVID-19 cases in the state as 'retail lockdown' and said shutting of retail businesses other than essentials will impair the ability of businesses to survive.

Stressing on the importance to calibrate "a balance between lives and livelihood", RAI said the #BreakTheChain order by the Maharashtra government once "again brings a majority of retail businesses to a complete halt.Retail businesses of non-essential goods are feeling discriminated against for being pressed by restrictions and lockdowns without any respite from the government". 

The Maharashtra government on Sunday announced a weekend lockdown and night curfews during the weekdays from Monday to April 30, in addition to a slew of other restrictions like closure of private offices, theatres and salons to curb the unprecedented surge in COVID-19 cases in the state.

Reacting to the order, RAI CEO Kumar Rajagopalan said,"The retail industry will again start experiencing severe liquidity challenges due to the ''Retail Lockdown'' in the state, while the fixed operating costs remained intact." It is expected that the retailers pay electricity bills, property taxes, among others in spite of being shut. The new order will have a contagion effect on the entire retail ecosystem in the state and across the country majorly impacting manufacturing and employment of millions, he added.

RAI said while the situation in the state looks grim and implementation of stricter rules is necessary, "it is also important to calibrate a balance between lives and livelihood. Complete shutting of retail businesses other than essentials will impair the ability of retail and allied businesses to survive." The retail industry body said there is a sense of discrimination that is prevailing as online retail for non-essentials goods are being permitted to operate, while physical retail is not. "RAI has been highlighting the fact that formal retail spaces are controlled spaces and have SOPs in place.

They have got the ability to adhere to hygiene standards and can definitely ensure social distancing, as compared to local markets," it added. Stating that there has been no recognition of retail employees as frontline workers or prioritising their vaccination, RAI said nearly 90 per cent of the frontline retail workforce is less than the age of 45 years. Commenting on the financial burden of the restrictions, RAI said nearly 60 per cent to 70 per cent of costs are fixed costs.

This, along with low margins, leaves businesses with limited flexibility. "Rents and salaries to employees make a large part of this cost. Large capital is invested as working capital as it is a long lead time industry. As most of this is borrowed capital, retailers are already finding themselves in a deep liquidity crisis. Though the manufacturing sector is permitted to operate in the state during this time, they will be unable to get orders since retail is shut," it said.