How is COVID-19 going to affect India’s GDP?
Investment Information and credit rating Agency (ICRA) recently projected the probability for the GDP of India to slip to a negative one percent. The GDP can further contract if the existing lockdown continues. GDP in the simplest term, is the sum of all economic activities happening in the country. A shrinkage of GDP would mean a fall in the overall output in various sectors of India. Among the lockdown, one of the worst-hit sectors is of retailers. They are either forced to close or had a lesser footfall of consumers because of the pandemic.
How is this pandemic going to affect the retail industry?
During the lockdown, when even big e-commerce struggled to keep us with groceries and fresh food categories, that’s when brick and mortar shops or local kiranawalas came to our rescue. McKinsey’s report says purchases from Kirana stores have jumped up by 39%. The report also signals for the surge in customers in these stores even after COVID ends. While trying out the cooking skills during the lockdown, people preferred neighborhood stores for buying the ingredients. With 12 million mom and pop stores in India, it has now opened a gate for substantial technological advancements that can strengthen the small retailers and make them future proof if planned wisely.
What problems will they be facing?
Right now, retailers are facing difficulties in keeping up with health and safety, labor force, managing the supply chain and cash flow. But these are just the beginning of challenges the retail sector would face. Retail Association of India (RAI) predicts 9-12 months of duration for the retail industry to recover from the catastrophe which had hit the world.
With just 7-8% of the retail industry working continuously to supply essentials to citizens, they face challenges in restricting and adapting to the new norms of social distancing. Identifying the right technology with optimizing the supply chain is the hurdle of the retail industry. The more modern business model demands adaptation of the changes with the emerging technology, which can facilitate the ease of business keeping right with the rules and regulations in place.
How will the retail sector look post COVID-19?
How would the world look like post-COVID is very uncertain and difficult to predict? But definitely, there are going to be changes in consumer spending behavior and commerce industry as the whole. We have already seen firms partnering unpredictably. As we say, unexpected situations call for out-of-box solutions and strategic partnerships and it won’t be surprising to see if any of such partnerships go for longer. After all, friendships created during hard times tend to stay longer.