Retailers mull job cuts, closures as COVID losses bite

July 15, 2020

LAHORE: A number of brands are mulling to shut down their outlets and cut jobs from the next month as they booked 35 percent of losses on a huge dip in footfall and revenue due to COVID-19 lockdown,...

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LAHORE: A number of brands are mulling to shut down their outlets and cut jobs from the next month as they booked 35 percent of losses on a huge dip in footfall and revenue due to COVID-19 lockdown, industry officials said on Tuesday.

The Tier-1 retailers said they were left with no other option but to pass on the impact of pandemic-led slowdown in business activities to both human resource and shops as part of their desperate efforts to realign their businesses for the future.

They said retail sector has been facing cash flow issues since the enforcement of lockdown, and was almost unable to pay suppliers, employees, and the landlords.

“The registered retail sector is losing money by every passing day, while there was no way forward in sight,” Tariq Mehmood, Chairman Chainstores Association of Pakistan (CAP) told The News.

“The government has ordered us to close at 7 pm while no business is allowed on Saturdays and Sundays, which are the main business days for the retail sector.”

He said the sales of the brands did not pick up since last winter season ended in the mid of February.

Mehmood said the registered sector paid almost 35 percent of the invoice to the government in taxes, whereas its unregistered counterpart was working happily with the new working hours without paying a penny in revenue.

Altaf Hashwani of women’s clothing brand Sana Safinaz said human resource was the top asset of brands, which it took them years to develop, “but given the situation, there was no way of knowing how to retain it”.

“Safely speaking, almost 25 percent of brands’ shops will be closed down in the near future due to the lockdown-led losses,” Hashwani said.

“The brands registered, almost on average, just 30 percent sales during the current season and nearly missed the complete season this year expect for 18 days of March, when new products were launched, and ten days before Eid-ul-Fitr.”

However, he said, the footfall and sales during these days were also limited due to weather and strict implementations on COVID-19 standard operating procedures by the Shopping Malls and standalone shops of the different brands.

Asfandyar Farrukh, owner of another famous exporting brand Hub, said zero sales were recorded after Eid-ul-Fitr, while in the last week of Ramzan sales dropped 50 percent compared to the corresponding period of the last fasting holy month.

“A loss of turnover worth almost Rs1 trillion has been recorded during the 55 days of COVID-19 lockdown, which also caused a 15 to 20 percent loss to the national exchequer as revenues were not generated.”

He said the industry was anticipating realignment since the start of the pandemic and lockdown.

“A number of small brands is going to be closed in the near future or by the end of the pandemic.”

Further, Farrukh said the existing major brands were also going to shrink at least 10 to 15 percent as the sales had dropped drastically, while there was no letup in capital expenditures such as rentals, salaries, and pending payments to the suppliers.



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