‘ad hoc’ pandemic controls cost retailers millions

The Sri Lanka Retailers’ Association (SLRA) has issued a clarion call for support towards the industry and for a consultative approach when taking national lockdown decisions – especially at short notice – as the sector has witnessed mounting multi-million rupee losses overnight due to ad hoc measures being taken. While positively endorsing the Government’s drive to curb the Covid spread and assuring of their ongoing support, SLRA stresses that the implementation of Covid controls should not affect the continuity of the retail sector.

SLRA is a dominant grouping in Sri Lanka’s Organised Retail Sector (ORS), consisting of last-mile retailers such as FMCG (fast-moving consumer goods) vendors, supermarkets, vendors of clothing, fashion, and jewellery, household and consumer durables, footwear and accessories, e-commerce, healthcare and wellness, entertainment, restaurants and fast-food sellers, and shelter and housing providers.

The ORS plays a significant role as a collective voice within the Sri Lankan market including SMEs (small and medium enterprises) and also in employment provision. It accounts for around one-third of the GDP and over 15% of employment in the country. Vibrant retail plays an essential part in the robustness of the Sri Lankan economy since the retail sector value chains’ trickle-down effects extend to the very grassroots of the supply chains, including stakeholders such as farmers, livestock breeders, and SME suppliers.

During a virtual webinar organised by the SLRA on 25 June, representatives of SLRA firmly stated that the ORS is not a mere sub-sector but an entire ecosystem of its own in the country, spreading out to multiple streams of sub-economic strata, thus impacting the very foundations of the country’s socio-economic makeup.

SLRA Founder/President Hussain Sadique emphasised on the importance of the retail ecosystem’s functioning. “Modern retail has come to stay in Sri Lanka. The retail industry contributes billions to the Sri Lankan economy and supports nearly one million direct jobs and many more indirectly. This sector is a major system for Sri Lanka’s youth employment and helps in addressing the burden of youth unemployment. It is also a key industry on the frontline of the Covid-19 crisis. The ORS shoulders the last-mile delivery burden of essentials and food during the lockdown. The ORS’ economic significance is not only demonstrated by being the closest touchpoint system to Sri Lankan customers but also by its impact at the B2B (business-to-business) level. Annually, the ORS invests billions in new infrastructure and pays significant property rental fees for premium, high-street retail space that generates a major amount of revenue for the Sri Lankan real estate businesses. Therefore, this is the time that the support of the Government towards the ORS is to be channelled. By investing to preserve this sector now, far worse social consequences would be prevented later on,” he stated.

“We are collectively calling for support measures that will enable the ORS to weather the worst of the crisis and be in a position to make a meaningful contribution towards economic recovery. The lockdowns implemented without consulting the ORS, have a very negative impact on it. No other country closes retail systems and supermarkets during a Covid lockdown, but rather implements them along with controls such as self-distancing. Due to non-consulted lockdown announcements, perishable stocks in the ORS are destroyed overnight with multi-million rupee losses; and these affect the suppliers, while retailers’ staff retention and turnover too has become very problematic. Demand in retail sub-sectors such as “consumer durables” has increased since more consumers are now staying at or working from home, and lack of consultation with the ORS in terms of lockdowns hampers their deliveries too. Therefore, keeping consumer durables outlets open is vital for the customers as well. All these would operate much better if there are wider consultations with the ORS,” Sadique further added.

SLRA representatives stated that allowing the retailers to operate even during lockdown periods with pre-agreed guidelines would greatly relieve the consumers and families across the country that otherwise would face a crisis in sustaining their lives. To overcome the heavy financial losses caused from ad hoc lockdowns and rupee devaluation, the ORS requests the Government for a reduction in VAT and a reduction in utility tariffs such as on electricity, which would greatly support the distressed retailers and also help them to transfer such cost benefits to the valued customers. An extension of moratoriums given to retailers’ business loans will be critical for the speedy recovery of the sector. Furthermore, as the employees and staff of the ORS perform a Covid-19 frontline role, the ORS reminds that they are facing severe health risks and urgently requests to receive the Covid-19 vaccination. Speedy implementation of these measures would help revive the ORS’ smooth functioning in Sri Lanka and ease the supply and price inflation pressures that are now ravaging the local market.