Coronavirus Impact: India’s Retail Shut Down as Cases Grow

James Fallon and Mayu Saini
·7 min read

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NEW DELHI, India — An immediate closure of malls in Delhi was mandated Friday, along with a suspension of all nonessential services until March 31 in view of the growing number of coronavirus cases over the last week.

“In view of the prevailing situation, we are closing down all malls (except grocery, pharmacy and vegetable shops in them),” Arvind Kejriwal, chief minister, Delhi, said on Twitter.

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There have been 17 cases of the COVID-10 infection in the capital city; five people have been cured, and one death. Nationwide, India has 223 reported cases of coronavirus, with four deaths as of Friday.

Malls were closed last week in other major cities including Bengaluru and Mumbai, with the state governments taking action to shut down malls in Karnataka and Maharashtra. Several other state governments across India have already taken action, with schools, colleges, restaurants, gyms and spas closing and retailers facing shutdowns in malls and a steep drop in customer turnout.

On Thursday, in a televised speech, Indian Prime Minister Narendra Modi appealed to people to stay home as much as possible for the next few weeks, and set a daylong curfew on Sunday to prevent community transmission.

International commercial passenger flights will not be allowed to land in India beginning March 22, for one week. In additional measures, all the states of India have been asked to enforce work-from-home for private-sector employees except those working in emergency, essential services.

India’s $850 billion retail sector has been reacting to the global pandemic over the last four weeks with hand sanitizer, face masks and a step up in the cleaning at malls and other organized retail outlets.

According to statistics by Anarock retail, a real estate services company, there are 24 malls in Bengaluru in Southern India, and an equal number in Mumbai in Western India. The New Delhi Capital area, which includes New Delhi and the surrounding areas of Gurugram and Noida, has 33 malls. Gurugram ordered a shutdown of malls on Wednesday, including weekly bazaars, which include popular local markets, night clubs, lounges and bars.

At this time malls have been ordered for closure till March 31 in most states, as have movie theaters, schools and colleges.

Although malls have been ordered to close, for the time being, stand-alone stores and high streets remain open.

“Whether there is a government diktat or not, retail is going to take a hit. It is a very rapidly changing scenario globally, but India also has different kind of challenges than other countries since a majority of the retail is in the unorganized sector,” Arvind Singhal, chairman and managing director of consulting firm Technopak, told WWD. “That the high-street stores can stay open is a moot point — it is a question of expenses of keeping the store open without customers, as well as concerns for their own safety and that of their staff.

“The real damage will be for fashion and clothing retailers — footwear may not be impacted as heavily, nor would consumer durables,” he observed. “In some parts of India, like Northern India, the winter merchandise was still on the shelves. Also, India is a large exporter of garments. This is going to be impacted by the global slowdown as well, and these will find their way into the market at discounted and value prices.

“Right now it may well be mall versus non-mall — but either way the footfall in the stores that are open has dropped dramatically, except in the case of grocery and essential items. At this time customers are not looking for fashion, footwear or anything discretionary,” he observed.

“It is still early days,” said Rajat Wahi, partner at consulting firm Deloitte. “It is the beginning of the lockdown mode, but there is still a sense of denial that something is going to happen. Right now, we are treading a very thin line — and hoping that it will get better by mid-April,” he said, noting that while brick-and-mortar stores would see a substantial decline, e-commerce players were likely to see an increase as families spent more time together. “India has a different dynamic than the West, as families live together and might well use the time to ramp up on apparel, home furnishings, etc., on e-commerce sites.”

Brands and retailers themselves are bracing themselves to manage the situation, even while watching the changes in the international markets, many of which are under lockdown.

“This is clearly something we have not faced since World War II, any illusion that this will resolve itself within a month is going to land us only in trouble,” said Dilip Kapur, founder of Hidesign, which has 100 stores across India and exports leather bags and accessories to more than 25 countries. “How the businesses have to reorient themselves to survive is not clear. But we are assuming that there will be a significant decline in next three months in our turn over, which will mean that we have to cut our costs equivalent to survive.

“Mall stores have largely all been closed down and this is the major issue faced by brands like Hidesign, which don’t have high-street stores. We are working with the mall managements to understand how we will handle the situation in terms of rentals. Regarding the front-end colleagues that were working with us, we are supporting them during this period with a large part of their salary and we will see once again at the end of April how to take it forward if this situation continues much longer. We are not asking any workers to leave the company in the front end right now, the assumption being that we will resume and that it is our responsibility to protect their jobs during this period,” he said.

Manjula Tiwari, cofounder and chief executive officer of Future Style Lab, which has 30 stand-alone stores and 110 doors in department stores and multibrands outlets across India, spoke about the turmoil in the retail segment over the last few weeks. “While we all have been watching the situation we have been making sure stores are sanitized. The front end of the stores can easily pass an infection and we do play a role as retailers. The second part is to scrutinize our inventory and our costs, focus on online sales where the overall sentiment is low. Many retailers are reacting by reducing their inventory,” she noted.

“It is difficult to figure out when this will blow over, but as the head of the business, we have to make some assumptions, and while we are aware that the first quarter of the new financial year will be difficult [India works on a financial year from April 1 to March 31], we are cautiously optimistic that by the second quarter [July onward] demand should go up, and hopefully settle by the time the festive season begins in August/ September.”

Smaller retailers, like Adarsh (who goes only by one name) opened a 3,000-square-foot fashion luxury store three weeks ago at the prestigious Ambawatta complex, in Mehrauli in New Delhi, which is still in the launch period.

He said although his store is not in a mall, it is a part of a shopping complex, and would be subject to closure. His store, Osaa by Adarsh, targets a higher-end clientele. “Suddenly things are completely different in these three weeks. We had a lot of traction for the first 10 days, and since then.…It’s not like people have stopped shopping, or planning their shopping for bigger events, but since we do a lot of high-end custom design we are taking orders on WhatsApp. We are taking the time to design and plan out custom outfits better.”

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