With an epic battle of billionaires for supremacy in one of the world’s most prolific markets and a pandemic-propelled surge in online shopping in the background, India’s nearly trillion-dollar retail market is hoping to touch 85 per cent of the pre-COVID business in the first half of the new year, as per a report by news agency PTI.
In a year when the COVID-19 carnage ripped apart the retail business, circa 2020 will best go down for the unravelling of the war between Jeff Bezos, the world’s wealthiest man, and richest Indian Mukesh Ambani for pre-eminence in the booming market that is estimated to reach USD 1.3 trillion by 2025.
It all started with Ambani’s Reliance Industries agreeing in August to buy assets of the nation’s second-largest retailer for Rs 24,713 crore, just a year after Bezos’ Amazon purchased an indirect stake in the indebted Future Retail. Amazon opposed the deal, claiming it violates Future Group’s investment agreement with it, according to the PTI report.
“The pandemic taught retailers a concept called essential and non-essential from a government action perspective. Segments such as apparel, jewellery, shoes and CDIT (Consumer Electronics, Durables, IT and Telephones) among other non-essential categories reported 100 per cent loss of business during the lockdown as all stores were closed,” Retailers Association of India (RAI) CEO Kumar Rajagopalan told PTI.
Essential category players also faced challenges, albeit of a different kind — dealing with huge spikes in demand, coping with supply chain challenges, ensuring liquidity, modifying and managing store operations to maintain safety standards, taking care of employee health and grappling with shortage of staff, he added.
With potential vaccines expected to hit the market in early 2021, large modern retail companies and offline retail stores are cautiously optimistic about people venturing to shop like in pre-COVID times even as they have accelerated omni-channel models, fast-tracking their digital route to reach consumers.
“Retailers are hopeful of achieving about 85 per cent of pre-COVID levels of business in the first six months of the year 2021,” he was quoted by PTI as saying. However, he also said that although globally, COVID-19 vaccinations have started, the pandemic situation may take some more time to completely settle, and thus retailers should move ahead with cautious optimism in 2021.
Spencers & Natures Basket Managing Director and CEO Devendra Chawla told PTI, “We are very optimistic about the coming year with demand picking and supply constraints getting eliminated, we are looking forward for a good 2021”.
LOTS Wholesale Solutions Managing Director Tanit Chearavanont told PTI that the retail sector underwent a rapid transformation in 2020 and as a result, next year will see a positive impact with the market returning to its form and making an upward curve.
Even though there is optimism over rebound of the retail industry next year, Rajagopalan was quoted by PTI as sauing, “We believe that recovery will not be possible without unconventional solutions and government support. At this juncture, all efforts are required to boost the local economy to help the survival of the retail and restaurant sectors, thus saving millions of jobs”.
METRO Cash & Carry India MD & CEO Arvind Mediratta also told PTI that in 2021, technology will continue to play a vital role in transforming the retail experience.
“With a big play on Omnichannel, retailers will have to devise different ways of wowing customers through a right mix of innovation and technology. The focus will also be on building business resiliency to operate smoothly during any future crises,” he said.
The pandemic has revolutionised the way consumers think about their health and has forced them to re-orient their actions as well as their purchasing behaviour with a special focus on the channels they are using to shop, Chearavanont added.
“We are seeing the basket size of our customers attain pre-COVID levels. Moreover, our customers are buying across all categories and are not limited to just essential commodities,” he said.
According to Adarsh Menon, Senior Vice-President and Head of Flipkart Wholesale and Walmart India, the pandemic will fundamentally change some consumer habits.
“Consumers will restrict physical movement to essential trips and prefer to stay indoors. As a result more customers will continue to order online and for delivery than pre-COVID times,” he said.
Deloitte India Partner Rajat Wahi said e-commerce, which accounted for less than 3 per cent of total Indian retail in value terms leading up to March 2020, has almost doubled share across most categories, and may end the year at 6-7 per cent of total retail doubling its overall share.
Stating that retail has always been about consumer choices, convenience and experiences, KPMG Partner and Head — Consumer Markets and Internet Business — Harsha Razdan was quoted by PTI as saying that the agility and ability of this sector to meet consumer expectations during COVID-19 is what kept it at the forefront.
“Safety and wellness rather than only price have emerged as the new parameters for consumers. Contactless and digital payments have now become preferred modes of payment. Product availability is now favoured rather than an array of products for selection,” Razdan told PTI.
Even as COVID-19 kept retailers on their toes in 2020, some of them were busy making deals.
The biggest of them was Reliance Retail Ventures Limited’s Rs 24,713-crore deal with Kishore Biyani-led Future group to acquire the latter’s retail and wholesale business and logistic and warehousing business.
It was bitterly contested by global e-commerce major Amazon claiming its rights through an indirect stake in Future Retail by virtue of its Rs 1,500 crore acquisition of 49 per cent stake in Future Coupons, a promoter group entity of Future Retail.
Other deals of the year include Walmart-owned online retailer Flipkart picking up 7.8 per cent stake in Aditya Birla Fashion and Retail Ltd. Flipkart Group had acquired 100 per cent stake in Walmart India.