The Coronavirus pandemic had an unprecedented impact on Indian Real Estate, with all property transactions coming to a complete standstill between March and June of 2020 when the whole country went into an indefinite lockdown. Following this disastrous period, when the market started bouncing back towards recovery we were hit with the far more aggressive second wave which resulted in a complete halt in all development and construction activities, the migration of workers away from the cities, and a massive economic downturn. Today, due to extensive vaccination drives across the country, many parts of the real estate sector has started so show signs of sustainable recovery.
Despite the signs of recovery, the pandemic has already quickly transformed the topography of all forms of business. Customers are wary of visiting malls, shops and other traditional brick and mortar retail setups. According to a study of data acquired by Statista, retail mobility had dropped by 55%-60% across India due to lockdowns and curfews across cities.
Today, even though the retails segment has increase to 72% of pre-pandemic levels, it has at a cost.
The pandemic has caused a massive disruption in the retail industry which has caused irreversible changes in people's purchasing habits. The rapid adoption of the internet for retail related demands has led to the skyrocketing of digital sales, giving birth to a whole new form of "shopper" or "customer", one who might carve out an evolved future for the retail industry.
These disruptive digital forces in the retail and consumer products market have caused a boom in e-commerce retail. Retailers have thus quickly realized that switching to a digital market provides greater opportunity to acquire new customers, engage better with existing customers, and significantly reduce the cost of operations. They foresee that this adoption of digital markets will in turn result in a positive influence on revenue and margin, even in a pandemic environment. But not many are agile enough to adopt this digital transformation that's needed in a pandemic situation.
The retailers who are still involved in traditional brick and mortar establishments are facing extreme financials pressures of paying their Property tax, given the drop in footfalls and financial inflow. Thus retailers, landlords and traders across the country are seeking a waiver of property tax, renewal and license fees from both the state as well as the central government. They are also looking for a reduction in fixed, recurring charges such as electricity and water bills.
Additionally, to recover from the heavy losses and financial instability, the industry body is also seeking:
- Extension of renewals of existing permits and licenses for a year.
- Relaxation in compliance requirements of retailers to pay MSME suppliers.
- A complete waiver to landlords and malls in payment of property tax for the year 2021-22.
As it stands today, the Retail sector is on the way towards digitization. New retail competitors are cropping up every day starting off with digital adoption giving consumers much to choose from on digital markets.
However, brick and mortar retail setups will never cease to exist. The tangible interaction between a product and its consumer is an irreplaceable experience. What has become evident is that additional streams of revenue are absolutely essential to sustain traditional retail setups during this financially unstable period. Retails need to also adopt a digital-focused mindset to compete during this pandemic period where there is no dearth of online choices.
