Coronavirus: Huge dip in revenue forces retailers to mull closing shops

LAHORE: Industry officials say retailers are mulling to shut down shops and cut jobs from next month after recording 35% losses on a huge dip in footfall and revenue due to the coronavirus lockdown, reported The News.

Tier-1 retailers have said they were left with no other option but to pass on the impact of the pandemic-led slowdown in business activities to both human resource and shops as part of their desperate efforts to realign their businesses for the future.

According to sellers, they have been facing cash flow issues since the enforcement of the lockdown and are unable to pay suppliers, employees and landlords.

“The registered retail sector is losing money by every passing day, while there is no way forward insight,” Tariq Mehmood, Chairman Chainstores Association of Pakistan (CAP) told The News.

“The government has ordered us to close at 7pm while no business is allowed on Saturdays and Sundays, which are the main business days for the retail sector,” he added.

Mehmood said the sales of the brands did not pick up since last winter season, which ended in the mid of February.

He added the registered sector paid almost 35% of the invoice to the government in taxes, whereas its unregistered counterpart was working happily with the new working hours without paying a penny in revenue.

Altaf Hashwani of Sana Safinaz’s told The News human resource was the top asset of brands, which it took them years to develop, “but given the situation, there was no way of knowing how to retain it”.

“Safely speaking, almost 25% of the brands’ shops will be closed down in the near future due to the lockdown-led losses,” Hashwani said.

“The brands registered, almost on average, just 30% sales during the current season and nearly missed the complete season this year expect for 18 days of March when new products were launched, and ten days before Eid-ul-Fitr.”

However, he said, the footfall and sales during these days were also limited due to weather and strict implementations on COVID-19 standard operating procedures by shopping malls and standalone shops of the different brands.

Asfandyar Farrukh, owner of exporting brand Hub, said zero sales were recorded after Eid-ul-Fitr, while in the last week of Ramazan sales dropped 50% compared to the corresponding period of the last fasting holy month.

“A loss of turnover worth almost Rs1 trillion has been recorded during the 55 days of the coronavirus lockdown, which also caused a 15 to 20% loss to the national exchequer as revenues were not generated.”

He said the industry was anticipating realignment since the start of the pandemic and lockdown.

“A number of small brands are going to be closed in the near future or by the end of the pandemic.”

Further, Farrukh said the existing major brands were also going to shrink at least 10 to 15% as the sales had dropped drastically, while there was no letup in capital expenditures such as rentals, salaries, and pending payments to the suppliers.

Originally published in The News