The rise in consumer sentiments post the second wave of Covid as reflected in increasing retail sales in July, particularly in southern states, has raised optimism that the festive season up ahead till December will not be as below expectations as earlier feared.
Retail sales in July 2021 were at 72% of the pre-pandemic levels (July 2019), as against 50% in June 2021, according to the 18th edition of the Retail Business Survey by the Retailers Association of India (RAI).
The RAI report released Tuesday reveals that retail businesses in south India have indicated a very sharp comeback in July 2021 with sales at 82% of the pre-pandemic levels (July 2019), as against 50% sales in June 2021.
“There is a possibility of significant sales recovery for retail businesses as the festive season approaches, provided restrictions on modern retail are relaxed across the country allowing smooth operations and return to normalcy,” stated Kumar Rajagopalan, CEO, Retailers Association of India (RAI).
In terms of regional sales growth, the western region is yet to improve substantially as retail sales are still 57% of pre-pandemic levels (July 2019), while it was 50% of the level in the corresponding month last year. The lower than expected rise in sales in the region is being attributed mainly to the prolonged curbs in Maharashtra that disrupted the smooth functioning of malls and large stores.
In categories, Quick Service Restaurants (QSR) recovered the best in July 2021 with sales at 97% of the pre-pandemic levels (July 2019). However, Beauty & Wellness, which includes Salons, is still at 50% of pre-pandemic sales, while Apparel is at 63% sales of the pre-pandemic levels in July 2021.
The Reserve Bank of India (RBI) in its latest consumer confidence survey report released earlier this month, however, states that consumer sentiments “for the current period remained weak and the current situation index (CSI)3 stood around the all-time low level recorded in the previous survey round as most households reported lower incomes and a higher level of price as compared to a year ago”.
The RBI survey however projects greater consumer optimism for next year driven by substantial improvements in the outlook for the general economic situation and employment scenario after the waning of the second wave of the COVID-19 pandemic. “The future expectations index (FEI) returned to optimistic territory; respondents placed higher confidence on household income going forward,” states the RBI report.
Retail is the fastest growing sector in terms of employment generation and is second only to agriculture in terms of the number of people it directly employs, besides creating indirect employment opportunities. Opening up of retail is expected to give businesses a bigger chance to recover, saving the livelihood of millions who are dependent on the retail ecosystem.