Retail industry expects growth in 2nd half of 2020

Mumbai: As economic slowdown continues to hurt sales, the Indian retail industry expects to bounce back in the second half of 2020 on the back of consumer demand revival and increased spending.

While major players struggled to keep themselves on the growth chart in 2019, they expect a decent double-digit growth coming back in 2020.

But sectoral experts are cautious, saying it would depend on various factors like recovery of manufacturing and other sectors, incentives in the Union Budget, and availability of money in the hands of consumers to make purchasing decisions.

"We are hopeful that consumer sentiments will turn positive as the year 2020 rolls out. The second half of 2020 could see a pickup in demand and growth," Rakesh Biyani, Future Retail's Joint Managing Director, said.

Though the economic slowdown started in high-ticket segments like real estate, auto, and consumer durables due to the credit squeeze triggered by the NBFC crisis, it has now spread to other sectors such as retail, as the consumption basket shrank.

According to Debashish Mukherjee, Partner and Regional Lead - Consumer and Retail, Middle East and Africa at A T Kearney, in 2019 the sector had challenges in terms of lower growth.

"People expect growth to come back in 2020. However, it depends on (how) consumer sentiments improve and the consumer has to feel richer than they are.

It is not that there is zero growth but, the growth is not that exciting to make that kind of purchasing decision, which they use to. In some way, more money has to come into the hands of people," he said.

Retailers Association of India (RAI) CEO Kumar Rajagopalan said the coming year would have lots of hopes but would also have many challenges as well.

"It would take at least another six months for the economy to showcase itself in the full bloom, and (it) may not be very easy," Kumar said, adding that it would also depend on the government's support which includes ease of doing business across sectors, which may have an impact on retail as well.

V Mart Retail CMD Lalit Agarwal said though the 'animal spirits' were missing in 2019 in the market, compared to the last two years, however, the organised retail would bounce back as it is a cyclical slowdown in consumption.

"We believe that the consumption slowdown, which is a reflection of weaker consumer sentiments, dampened the demand. The impact of this was felt across our key markets" Agarwal said.

"However, the organised retail sector in India has been through the ups and downs of many business and economic cycles over the last decade, and, each time, come out stronger and better.

This time too will be no exception," he said. According to Mishra, 2019 was a mixed year for the retail industry. Some retailers in the value segment have reported good growth.

Rajagopalan said that growth in 2019 was not very good and it was not a very great year for retail. Formal retailers have shown growth but, it is not dramatically a double-digit growth, he added.

METRO Cash and Carry India CEO and MD Arvind Mediratta said 2019 was a good year for the small kirana (grocery) shops and retailers and they competed with big retailing houses.