‘Mounting multi-million rupee losses overnight due to ad-hoc measures’

Sri Lanka Retailers’ Association (SLRA) has called for a consultative approach when taking national lockdown decisions, especially at short notice, as the sector has suffered mounting multi-million rupee losses overnight due to ad-hoc measures.

While endorsing the government’s drive to curb the COVID spread and assuring their ongoing support, SLRA stressed that implementation of COVID controls should not affect the continuity of the retail sector.

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

ORS plays a significant role as a collective voice within the Sri Lankan market, SMEs and employment provision. It accounts for around one-third of the GDP and over 15% of employment in the country. Vibrant retail is 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 such as farmers, livestock breeders and SME suppliers.

During a virtual webinar organized by the SLRA on June 25, its representatives said 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 on the very foundations of the country’s socio-economic fabric.

Emphasizing on the importance of the retail ecosystem’s functioning, Hussain Sadique, Founder/President of SLRA, said,

“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 employment and helps address the burden of youth unemployment. It is also a key industry on the frontline of the COVID-19 crisis”.

The ORS shouldered the last mile delivery burden of essentials and food during the lockdown. Its economic significance is not only being the closest touchpoint system to Sri Lankan customers but also its impact in B2B levels. Annually, ORS invests multi-billion rupees for new infrastructure and pays significant property rental fees for premium high-street retail space that become a major revenue of the Sri Lankan real estate business, he explained.

“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 ORS has a very negative impact on it. No other country closes retail systems and supermarkets during a COVID lockdown but implement them along with controls such as self-distancing”, he said.

Due to sudden lockdown announcements, perishable stocks in ORS are destroyed overnight with multi-million rupee losses, which affect suppliers while retailers’ staff retention and turnover too becomes problematic. The 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 ORS in 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 ORS”, Sadique further said.

SLRA representatives said that allowing retailers to operate even during lockdowns under pre-agreed guidelines, will help consumers and their families across the country as otherwise they find it difficult to access their basic needs.

To overcome the heavy financial losses from ad-hoc lockdowns and rupee devaluation, the ORS asked the government for a reduction in VAT and utility tariffs such as electricity which will support retailers and also help them to transfer such cost benefits to the 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 ORS perform a COVID – 19 frontline role, they should be vaccinated due to the severe health risks they face, SLRA said.