The Retailers Association of India (RAI) works towards creating a favorable climate for the modern retail industry in the country. Kumar Rajagopalan, CEO, RAI, spoke to Moneylife’s Priyanka Desai on the various challenges — and opportunities — facing the industry. This is the concluding part of a two-part series Priyanka Desai (ML): Are there any key issues that RAI is concentrating upon currently?
Kumar Rajagopalan (KR): There are some issues worth talking about. RAI will definitely work towards helping usher in the Goods & Services Tax (GST), which will bring in efficiency.
We also want a change in the Weights and Measures Act, 1976. This Act is of little relevance to today’s age and time. It was enacted when the country was going through a paucity of resources, across levels. Currently the country is facing paucity at very few places so the rules made (back) then are of no use now. It is more of a hindrance now. It is also allowing a lot of people to mis-utilize the power vested in them.
We also need a common Shops and Establishments Act across states. For example, not every state allows shops to be open 365 days. It is essential to take care of the people working in a store, making sure they have their mandatory employee leave and that work timings are favourable. It is also essential to understand that retail is a business which works more when people have a holiday, so when a state enacts a law to keep shops shut on Sunday, it is very detrimental for commerce and has a big impact on GDP. We have again made a submission to the government and are trying to bring in a uniform code.
The next thing is women in the retail workforce. Retail can accommodate more than 50% of workforce as women. Women have a natural flair for service industries, and retail is a true service sector. But some states may not allow women to work, let’s say, beyond 8pm.
In an urban region where most shoppers arrive between 7.30pm to 8pm, it is very painful not to be able to employ women during peak hours. Thus rules of such nature have to be reformed, like they were for the BPO industry, to make women more independent. ML: You earlier mentioned that retail is not even an industry right now. Could you please elaborate?
KR: Retail is a state subject and not an industry currently. It is not under any specific ministry. Any ministry can stake its claim on it; any ministry can reframe rules, but no ministry currently says “they are under us”. At some point they own us, at some point they don’t.
ML: Where is the big growth coming in currently? What are the overall trends that you are observing?
KR: The growth is still predominantly in big cities. Tier-I cities have the most potential. (But) there are two factors curtailing further expansion of retail in Tier-I cities, one is availability of good commercial space and two is high rentals. Since we do not have any zoning capabilities in the country it is more worrisome. Had the government made reservations for shopping centres — like for green spaces — and if they had given out those reserved spaces at reasonable rates to retailers, the consumer could have had much better choice. It’s all about (the marriage between) retail and entertainment, which I call ‘retainment’. If you want to improve lifestyle, ‘retainment’ centres have to be built. Malls have become the ‘retainment’ centres of today. But they are discouraged, not encouraged, by authorities. For example, malls pay more taxes, higher electricity bills, etc.
ML: A few retail analysts say that this festive season will be good for the retail sector compared to last year, but margin dilution is on the cards due to inflation. Do you agree? KR: No. As of now, I think consumer confidence is high despite inflation. Most retailers have been exhibiting double-digit growth numbers. We do not see why the festive season will not go well this year. In fact, we believe that consumers who could not spend in full strength last year will shop with some additional vigour this year. We have seen that September has been a high-growth month for the automotive industry — this is an indicator that other sectors will follow this trend as well in the upcoming festive season. —Priyanka Desai
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