The worldwide spread of the Covid-19 virus has created new norms for our society like isolation, lockdowns and social distancing. As these norms were active for almost the entire 2020, and staying at home has now become a new reality for people. This has also disrupted the way in which people used to buy products and services as the fear of infections is prompting them to avoid visiting stores, supermarkets and malls.
The retail industry has been one of the worst affected sectors and has borne the brunt of the pandemic. India’s over retail sales have fallen to historic lows, with year-on-year (YoY) volumes down nearly 40 per cent as late as till September.
Even though it faced a setback in terms of financial constraints to survive the crisis, the retail sector, which includes a large segment of MSMEs and start-ups, was able to sustain during the peak of the pandemic and serve consumers. The pandemic gave the industry an opportunity to reflect on its holdbacks and forced organisations to make structural changes faster than they had planned.
One such ‘change’ which significantly supported MSMEs sustain their businesses has been the use of online marketplaces. Prompted by the public health emergency, consumer behaviour transitioned gradually towards contactless shopping which opened opportunities for offline-online synergies in favour of Indian retailers and MSMEs. Today, there is an accelerated shift towards digital retail and e-commerce, redefining the way consumers buy products from the safety of their homes. As India slowly emerges out of the pandemic, it must strive to seize the best of the opportunities offered by digitisation and enable a strong revenue stream for its retailers and MSMEs.
The Covid pandemic has infused significant dynamism into India’s retail landscape to fast-inch its potential of touching $1.1 trillion in 2020. The revenue from e-retail alone is projected to touch $60 billion. Clearly, India is on the cusp of a retail revolution. With the pandemic creating a difficult financial environment, a large number of micro, small and medium enterprises (MSMEs) are trying to come online as retail sales from physical outlets have plummeted.
Any form of disparity between online and offline retailers is harmful as it may fuel resistance among smaller players to adopt technology. Previously, digitisation was undertaken by firms to boost consumer demand, optimise internal operations, and get competitive edge over other industry players. But now, in a Covid-controlled environment, MSMEs will have to go digital in order to survive in the larger interest of public health and the economy.
Moreover, many players may think that going online will mean more registrations, or delays in getting refunds, etc., along with other onerous compliances and regulatory protocols. For instance, there is a significant amount of disparities surrounding the current taxation framework (GST, TDS) which need to be resolved and replaced with a comprehensive structure to encourage businesses to move online.
Needless to say, access to goods and services through electronic medium has become a necessity today. The Digital India campaign envisions an economy which is digitally connected with multiple avenues for its citizens to leverage digitisation in all walks of life. One of the many avenues would definitely be the democratisation of India’s retail landscape — a digitally inclusive one — empowering both retailer and the consumer ecosystem.
The Central government’s endorsement of MSMEs on-boarding onto digital platforms would create a win-win situation. The sector (retail) that produces a vast variety of goods and services, through myriad supply chains and with the help of millions of retail and trading enterprises, has been able to provide for consumer necessities through the pandemic despite all odds.
Digital transformation of the retail landscape, at scale, can provide the sector an opportunity to attract consumers from across the globe and bring a resurgence of consumption to counter the ensuing economic downturn. Empowering MSMEs through online platforms will help counter the limitations of physical outlets and create innovative synergies for the larger ecosystem to benefit from.
For India to stand tall in a post-Covid world, it needs to strengthen its MSMEs, also considered the backbone of the economy, by encouraging digitisation and paving way for innovative business models like e-retail to thrive.
Patra is Spokesperson of the Biju Janata Dal, and Rizvi is Founding Director, The Dialogue