Covid curbs cut chainstores revenue by 40pc in FY20

LAHORE: The organised retail sector revenues slumped near 40 percent, while customer footfall fell 48.69 percent in FY2019-20 compared to FY2018-19 owing to Covid-19 related restrictions, industry officials said on Friday.

According to estimates, the businesses of the organised retail sector, which comprises Tire-I retailers and registered with the Federal Board of Revenue (FBR), faced heavy shocks in revenues primarily due to the repeated restrictions on ‘non-essential’ retail across the different federating units, equivalent to approximately 180 days lost to date compared to the pre-pandemic period.

Chainstore Association of Pakistan (CAP) raised alarm over their dilapidated financial situation with National Command Operation Center (NCOC) and federal government in a letter the copy of which is available with The News.

According to the letter, business has recovered slightly following the easing of restrictions, while the organised retail sector has also implemented an extensive vaccination plan for their staff.

In fiscal year 2020-21 the revenue loss reduced to almost 34 percent and customer footfall to 35 percent, compared with pre-Covid fiscal year of 2018-19, the CAP letter said. It said Lahore, Karachi, Islamabad, Faisalabad, and Gujranwala were the top five cities that witnessed most losses.

The highest revenue loss was recorded in Lahore with 44.88 percent followed by Karachi 39.50 percent, while Karachi led the drop in footfall of the customers by 56.58 percent. Following the losses and liquidity crunch faced by the sector, the Chairman CAP Tariq Mehboob asked the NCOC and federal government to permit all retail outlets and shopping malls with vaccinated staff to operate for seven days a week.

Mehboob in the letter to NCOC chief Asad Umar pointed out granting permission to the organised retail sector to operate for seven days a week with vaccinated staff would encourage those that were still avoiding the Covid-19 vaccination.

“Such a step will set a very positive example and incentivise all businesses, organised or otherwise, to ensure swift vaccination of their workforce therefore allowing the country to return to normal as soon as possible,” Chairman CAP said.

Moreover, relief in the form of permission to operate almost normally would give some much-needed breathing room to retail businesses after a prolonged and debilitating cycle of closures, he added.

Mehboob said all sectors of the economy and social life had borne the brunt of Covid-19 pandemic and it was not over as yet. “However, in comparison to other industries and sectors, retail businesses, education, and food and beverage sectors have been the worst hit over the past 18 months and continue to struggle financially due to repeated restrictions and the latter are now mostly open -subject to vaccinations.” CAP chief said retail businesses had invested billions of rupees in stocks (produced/purchased) for various seasonal periods during the period.

Concurrently, Mehboob said due to over 100 working days and almost 1,000 working hours lost, especially during peak periods, the retailers were unable to sell their inventory on a timely basis and, as a result, had accumulated massive financial losses and liabilities.

Chairman CAP pointed out due to the compounded impact of restrictions/partial lockdowns, retail businesses had now reached a critical stage where payments against supplies, rents, salaries, and overheads were no longer possible having exhausted all reserves and financing options.

“The domino effect of the crisis has already started impacting the sector and over 70 allied sectors including domestic manufacturing, cottage industries, wholesale trade, service providers, and dozens of other upstream businesses and the large workforce employed across the value chain. All of the sectors are now facing liquidity crunch.”

On behalf of all stakeholders, CAP chairman entreated with the government to allow the organised retail sector to operate throughout the week without any restrictions, with the understanding and condition that the businesses were fully compliant in terms of workforce vaccinations and adherence to SOPs/NPIs (standard operating procedures/ nonpharmaceutical interventions).