Business Environment Analysis

Rajendra Kumar Das (2023867)

University Canada West

BUSI 601: BUSINESS ENVIRONMENT, ETHICS & STRATEGY

Professor. Amir Teymourian

Due Date: 3rd February 2021

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ABSTRACT

This study attempts to analyze the impact of novel coronavirus on the Indian retail industry and

the people linked directly and indirectly to the industry. Being an employee in the retail sector, I

would be presenting my working experience during the pandemic and some facts and figures

published over the internet. This study will explain the major forces impacting the retail industry

and mention my suggestions for resolving the ethical situation.

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INTRODUCTION

Novel coronavirus impact on the retail sector of India, is it an opportunity or threat? The

pandemic has badly hit India's economic growth, and the effect is visible around all the

industries. One of the sectors that had a significant impact in the retail sector accounts for over

10% of the country's gross domestic product (GDP) and around 8% of employment. (Sundeep

Khanna, May 2020). I have had been working in the Indian retail industry for the last 11 years. I

experienced the impact of Novel coronavirus on every individual linked to Retail, so I want to

showcase the impact of economic, political, and societal environment forces on the retail sector

considering my observation, information available on the internet, database, and analysis and

thoughts from industry experts.

Economic environment forces – As the Indian economy struggled because of the lockdown,

only the essential retail services were allowed to operate with limited operational hours; these

steps impacted the retailers, suppliers, and their employees.

1 – Volume of business: Volume of business had dropped to nil during the initial stage of

lockdown. Due to measures introduced to curb the coronavirus's spread (COVID-19) in India,

retail and recreational mobility saw the steepest decline across states.

2 – Operational expenses: While the revenues have been nil, operational costs like EMI, rent,

staff salaries, etc. was a financial burden for the retailers.

3 – Demand declined: People's consumption volume changed as they were more worried about

their jobs and tended to save money for unemployment and medical expenses.

4 – Cost-cutting: Many retailers shut their business and removed appointed employees because

of huge capital loss, which impacted the retailer and the employees. Small retailers expect to

layoff 30 percent of their workforce going forward; this number falls to 12 percent for medium-

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sized retailers and 5 percent for large retailers. On the whole, retailers who responded to the

survey expect a layoff of about 20 percent of their workforce (economictimes.com, 2020).

5 - Impact on real estate: Retail shopping malls had to close the operation for a long time, and

because of business loss, they had to offer rent waivers to retailers. Among the key financial

indicators, their operating income is likely to decline 45-60% in 2020-21 (Kailash Barbar, 2020)

6 – Slow rate of money flow: As the purchasing rate had slowed down, retailers were not making

money; hence it was leading towards delay in payments, which eventually impacted the

manufacturer.

In the case of small retailers should have had a contact database of their loyal customers and

could have offered them home delivery of essential goods with a limited credit facility. For the

organized sector, the complete focus should have been on building their online platform and

gaining market share by offering a discount on those products available inside the retail store.

Political environment forces –

1 – Emergency curfew: Rules for the public were strong; hence they were not able to travel to

reach the desired location. As per the rules, any person using a car or bike and traveling beyond

two kilometers of their residence will have his car or bike impounded compulsorily (Harish

Dugh, 2020).

2 – Restriction on entry: Number of customers inside the shop to be kept at a minimum to

maintain physical distancing norms (Abhinav Sahay, 2020).

3 – Logistic restrictions: During the first week of lockdown, thousands of trucks carrying

essential commodities were stuck on the roads as they hadn't received permits from local

authorities. (Bachchan Kumar, 2020)

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India being a developing country with a 1.30 cr population, it was difficult for the Indian

government to control the declining economy during the pandemic. Apart from the government's

steps of comfortable loan facilities for new business, a moratorium for EMIs, etc., the

government should have taken necessary septs to safeguard the tax-paying employees who were

asked to leave their jobs.

Societal environment forces -

1 – Health precaution: People were scared to come out to public areas; hence they managed to

limit their purchases. As per the below, the statistic age group from 7-38 was the most scared.

Fig. 1. Level of fear of contracting the coronavirus

Note. Level of fear of contracting the coronavirus, 2020. From Personality & Behavior by Statista Research
Department, 2020 (https://www.statista.com/statistics/1104535/india-level-of-fear-of-contracting-
coronavirus-covid-19-by-age-group/). Copyright 2020 by Statista 2020.

2 – Panic buying: Once the news of lockdown was announced, people rushed to buy essential

products above their standard requirements, which eventually resulted in empty shelves and

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created an imbalance between demand and supply. Panic-buying commenced among consumers

days before the lockdown was announced, much like in other countries (Sandhya Keelery, 2020).

3 - No exchange, no return, and no trail: Many garment retailers in India implemented the policy

of no trail; on the other side, few retailers and online portals said, "no exchange or return on

apparel". Most of the Indian consumers prefer to try the garments before buying, and virtual trail

at online websites was not satisfactory for consumers; hence it impacted the retail store business.

On one side, the most scared age group was the young generation, and at the same time there was

a situation of panic buying, it was a clear case of general awareness. To avoid these problems,

there could have been more awareness programs to reduce the confusion in people's minds.

Explaining the point of no exchange, return, and trail, retailers who were struggling to get

customers, could have invited more customers by communicating a safe shopping environment

by sanitizing the apparels after trial and exchange.

Technology environment forces -

1 – Preference online: As the travel restriction was mandated, people preferred online shopping

instead of visiting retail stores. According to a survey below, the shopping trend after the

relaxation of the coronavirus (COVID-19) lockdown on Indians in April 2020, in contrast, about

26 percent decided to use the e-commerce sites for purchasing items beyond the essentials list

( Sandhya Keelery, 2020).

Fig. 2. Opinion about purchasing items beyond essentials after the coronavirus (COVID-19) lockdown
relaxation in India as of May 2020.

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 Note. Opinion about purchasing items beyond essentials after the coronavirus (COVID-19) lockdown
relaxation in India as of May 2020.
2020. From B2C E-commerce by Sandhya Keelery, 2020
(https://www.statista.com/statistics/1115631/india-coronavirus-post-lockdown-purchase-non-essential/).
Copyright 2020 by Statista 2020.

2 – Restriction on entertainment: Source of entertainment like movie theaters, kid's play area,

and gaming arcades inside shopping malls to remain closed (Abhinav Sahay, 2020).

3 – Uncomfortable atmosphere: For air-conditioning/ventilation, the guidelines of CPWD shall

be followed, which inter alia emphasizes that the temperature setting of all air conditioning

devices should be in the range of 24-30 degrees C, (Abhinav Sahay, 2020). People need a

comfortable atmosphere inside a closed building, but considering India's hot and humid climate,

the set guideline for air-cons made an unbearable breathing condition.

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As the situation demanded precaution over entertainment, likewise, at the current situation

theater are operational with the social distancing in place, the authority should have permitted

them to open theater much earlier to avoid business loss.

REFERENCE

Abhinav Sahay. (2020, Jun). hindustantimes.com. Unlock-1 SOPs for malls mandates 6-ft distance, face masks,

children play areas to be closed. https://www.hindustantimes.com/india-news/unlock-1-sops-for-malls-mandates-

6-ft-distance-face-masks-children-play-areas-to-be-closed/story-WGZ20pZavWOiyMfDRw7eCO.html

Bachchan Kumar. (2020, Mar). hindustantimes.com. Covid-19 update: Trucks ferrying essential goods stranded on

highways as India locks down. https://www.hindustantimes.com/india-news/covid-19-update-trucks-ferrying-

essential-goods-stranded-on-highways-as-india-locks-down-coronavirus/story-QHrN8cmh7LLuP0GjAdwlrO.html

economictimes.com. (2020, Apr). Covid lockdown: Retailers expect around 80,000 job losses.

https://m.economictimes.com/industry/services/retail/covid-lockdown-retailers-expect-around-80000-job-losses-

says-survey/articleshow/75029366.cms

Harish Dugh. (2020, Jun). zeebiz.com. New lockdown rules in Mumbai: Your car, bike can be impounded beyond 2

km radius. https://www.zeebiz.com/india/news-new-lockdown-rules-in-mumbai-your-car-bike-can-be-impounded-

beyond-2-km-radius-130048

Kailash Barbar. (2020, July). economictimes.indiatimes.com. Covid19 Impact: Mall operators' operating income to

decline 45-60% in FY2021, says ICRA. https://economictimes.indiatimes.com/industry/services/property-/-

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cstruction/covid19-impact-mall-operators-operating-income-to-decline-45-60-in-fy2021-says-

icra/articleshow/76749492.cms?from=mdr

Kahnna Sundeep. (2020, May). livemint.com. India's economy needs the retail sector to grow.

https://www.livemint.com/opinion/online-views/india-s-economy-needs-the-retail-sector-to-grow-

11588785884086.html

Sandhya Keelery. (2020, Oct). statista.com. Share of people engaged in panic buying due to coronavirus (COVID-19)

in India in 2020. https://www.statista.com/statistics/1119220/india-share-of-panic-buyers-after-coronavirus-

outbreak/

Sandhya Keelery. (2020, Oct). statista.com. Opinion about purchasing items beyond essentials after the

coronavirus (COVID-19) lockdown relaxation in India as of May 2020.

https://www.statista.com/statistics/1119220/india-share-of-panic-buyers-after-coronavirus-outbreak/