May 30, 2020

Covid 19 - the opportunity of transformation for Indian retail market

Entire world is currently fighting coronavirus, an invisible enemy that cannot be seen with bare eyes and can still attack anywhere in any circumstances. The superpowers are kneeling down before this virus. World Bank and credit rating agencies have downgraded India's growth for fiscal year 2021 with the lowest figures India has seen in three decades since it's economic liberalization in the 1990’s.

The former Chief Economic Advisor to the Government of India has said that India should prepare for a negative growth rate in FY21 and that the country would need a ₹720 lakh crore (US$10 trillion) stimulus to overcome the contraction. Infact, the International Monetary Fund projection for India for the Financial Year 2021-22 of 1.9% GDP growth is the highest among G-20 nations. Within a month unemployment rose from 6.7% on 15 March to 26% on 19 April. During the lockdown, an estimated 140 million (140 million) people lost employment. More than 45% of households across the nation have reported an income drop as compared to the previous year.

Retail is one of the sectors most affected by COVID-19, in both positive and negative ways. Grocers, pharmacies, and e-commerce marketplaces are striving to sustain their consumer access to essentials.

Covid 19 has given excellent opportunity to businesses to rethink, restructure and introspect their business strategies. This is an exciting and fantastic opportunity for small and medium retailers to upgrade to digital transformation of their business. Post covid lockdown people will be looking for home delivery, price comparisons, and customer services. Hence the small and medium retailers are in need of a platform that can help them achieve these customer aspirations.

In alpha cities like Mumbai, Pune, Banglore the working couples have to compromise their family time for grocery shopping over weekends so doorstep services or home delivery of products is their first choice. In smaller cities however home delivery of products is not the first choice of people due to their current lifestyle. But now times are changing and people in smaller cities are also looking for home deliveries instead of everytime going out to buy goods. They are also keen on maintaining social distance due to long lasting effects of the existing pandemic situation.

It is time for retailers who are running their business by traditional ways to transform themselves and run it on digital platforms and stock management systems.

Apart from this multinational companies are also looking to enter into local markets of smaller towns and cities. This will eat into the customer base and business margin of local retailers.

Multinational companies have good capital backing, ample resources and systematic strategies to expand their business. So to compete with them local retailers also have to upgrade themselves with digital platforms, update their catalog, advertise their products and provide doorstep deliveries. If not so they will lag behind and a considerable amount of their share will be eaten by other players in the market.

Small shopkeepers also have a big opportunity to grow by using digital platforms to compete with big shops or malls who have dominated for decades. Even there is a big opportunity for big shops and malls who have not upgraded themselves to doorstep services and digital stock management systems. Consumers are now planning to reduce short-term and mid-term spending, especially in nonessential categories. Therefore there is a need to understand the thought process of customers, market sentiment, customer wave and FDI by multinational companies for local offline shops. If a handful of people enjoy monopoly in the market it will be a problem.

Post covid situation is also favourable for newly started businesses or startups. These newly arising players have an equal chance to compete big business houses who are off late struggling due to covid lockdown. Covid 19 though has given many wounds and discouraged us still it has given us time to click on the refresh button of our life. In the context of covid-19, most of the local retailers are bearing huge loss due to lockdown situations. But if you see the post Covid situation many multinational companies will be hugely investing in establishing offline retail shops everywhere and the effect of this may break the backbone of retail shopkeepers.

So there is a need to strengthen local retailers. Most of the Indian economy particularly in smaller cities is run by the local shops. Hence it is alarming to think of the consequences wherein the big players overtake major market share from these local shopkeepers.

1 hour Tech Solutions Private Limited has Launched a chat based technical platform for such local shopkeepers by which they can sell their products to their customers online and provide home deliveries. Join us and grow with us. Let's march ahead in this journey of self governance.