Retail sales in June improve to 50% of pre-Covid levels; food and grocery nears full recovery

Earlier this month, retailers and wholesale traders were reinstated under the MSME sector to benefit under priority sector lending. (Reuters/File image)

Ease of Doing Business for MSMEs: The contraction in the MSME-led retail sector due to Covid in comparison to the pre-Covid scenario has reduced. From minus 79 per cent growth in monthly sales in May vis-a-vis May 2019, the situation has improved as contraction narrowed down to minus 50 per cent in June in comparison to June 2019 sales performance, according to retail body Retailers Association of India (RAI). This implied retail sales improved from 21 per cent in May to 50 per cent in June of pre-Covid levels. Importantly, the sector had almost recovered to the pre-Covid scenario in February as retail sales had peaked to 93 per cent of the year-ago period before the second Covid wave struck.

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“To get this rectified, the only change this time from last year is the availability of vaccines. If vaccination drive picks up, things can recover really fast just like how it is happening in the US or the UK. But if it continues the way it is, recovery is expected to be delayed,” Kumar Rajagopalan, CEO, RAI had told Financial Express Online.

The results were based on a monthly survey of a sample set of retailers by RAI. For June, 88 retailers were surveyed. The decline in retail sales during the month was highest in the sports goods segment at minus 66 per cent followed by minus 64 per cent in jewellery, minus 61 per cent in footwear, minus 57 per cent in beauty, wellness, & personal care, minus 52 per cent in apparel and clothing, etc. On the other hand, sectors nearing June 2019 level recovery were food and grocery with only minus 7 per cent decline and QSR with only minus 10 per cent contraction. Moreover, region-wise, North performed better with a minus 43 per cent decline in comparison to minus 50 per cent in West and South each, and minus 55 per cent in East.

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Earlier this month, retailers and wholesale traders were reinstated under the MSME sector to benefit them under priority sector lending. The former MSME Minister Nitin Gadkari had tweeted that the move will benefit 2.5 crore retail and wholesale traders in India. Wholesale and retail traders were carved out of the MSME sector through a gazette notification dated June 2017 based on the rationale that they were neither manufacturing units nor service units and hence, won’t be able to acquire Udyog Aadhaar Memorandum for registration of their units.

Recently, the Reserve Bank of India (RBI) had also written to banks to include retail and wholesale traders for priority sector lending. RBI had further informed all banks that such businesses engaged in retail and wholesale trade would be allowed to register on the MSME registration portal – Udyam Registration, as announced by the government. Moreover, multiple states including West Bengal, Karnataka, Sikkim, Bihar, Punjab, Himachal, Uttar Pradesh, Delhi, etc., eased Covid-related restrictions such as night curfews, weekend curfews, limited retail hours, etc. “Retail businesses continue to be stressed and are finding it difficult to sustain due to restricted timing of operations and weekend closures,” Rajagopalan said on Monday.