In this episode we talk about the rise in the mall operating group revenues, contractual hiring among major retailers, India’s data privacy law deferred and yet another surprising turn in Delhi Excise policy for liquor retail.
Hello and welcome to This Week in Indian Retail - a podcast and blog dedicated to the major events, news and stories that impacted the Indian retail industry in the last week. This is August 7th 2022 and I’m your host Prateek Malik from New Delhi. Let’s get started! Summary of Week 31 of 2022 :
Rise in the mall operating group revenues in India Credit rating agency CRISIL shared some key updates about the mall operating group revenues with the media over the last week. For starters, as per the ongoing healthy cash flows, the DSCR1 or Average debt service coverage ratio is also likely to increase from 1 last year to 1.3 this year. As malls resumed to regular opening timings this year, the recovery was steady with the retail sales touching pre-pandemic levels. Also, since the rental discussions were settled last year, malls were able to stay afloat with 90% retention of retail brands with the major contribution. Fashion, FMCG, electronics and luxury segments have been strong and steady drivers of the growth despite the lackluster performance by Cinemas, entertainment and F&B. According to CRISIL, the balance sheets of mall operators looks healthy with the debt to rental ratio likely to be at 3.2x this year versus the 4.2x in the last year. Mall groups have also raised equity capital and refinanced their debts, which has improved the liquidity. The general economic concerns of high inflation and rising interest rates continue to keep the retail market balanced, while the industry operators are bullish on the potential of the growth in this year.
Contractual hiring gaining adoption among major Indian retailers As per a recent report by workforce sourcing group TeamLease, retailer groups in India have a consistently clear execution of hiring new employees in the ecosystem this year, a positive indicator against the lay-offs during the pandemic in the last year. Quarter or quarter, the intent to hire among major retailers surged by 7% in Q2 vs Q1. There is an ample 75% intent towards new hiring. However, there’s a perspective shift that has happened. Now retailer groups are preferring contractual hiring against permanent employment. According to a Business Standard report, Titan Company increased contractual hiring by 42% in the last fiscal, Bata India 14%, Raymond 11%. D-Mart seems to be a major exception to this trend with 11% additional permanent workforce hired along with 10% contractual employees. According to the realty consulting groups, there would be an extra 86% physical retail space available in the market over the next year across all tier zones of the country that should further boost the retail workforce requirement.
The constant delay in India’s data privacy policy In general, the Indian retail omni commerce ecosystem talks a lot about consumer engagement and experience, there is a delicate aspect of consumer data privacy that seems to stay under the carpet among the soaring numbers. While the more developed zones across North America and Europe released and implemented their respective versions of the consumer data privacy laws, despite being one of the largest markets - India seems to be lagging behind. The Ministry of Electronics and Information Technology initiated the issues concerned with data protection in July 2017. Since then, the committee researched on the same and in Dec 2019, The Personal Data Protection Bill 2019 was tabled in the Parliament of India. Like always, there was wide criticism of the same and the government formed a Joint Parliamentary Committee (JPC) to examine the concerns. Post the major phases of the pandemic, the JPC presented an elaborate report in the Parliament. The JPC recommendations were different from global standards and withdrew criticism from global technology associations including members from Microsoft, Google, Apple, Amazon, Dell, etc. This week on August 3 - IT Minister Ashwini Vaishnaw told news agencies that government had no plans to replace the bill with the updated draft and withdrew the bill in the Parliament. He said that the government would work on a comprehensive legal framework to present a new draft. Officials are telling the media that public consultations would be done for any new draft and possibly it can be tabled again in the winter session of the Parliament.
Delhi government’s excise policy change for liquor retail network According to Deputy CM Manish Sisodia, the city will maintain a network of 500 government agency operated stores, that can increase to 700 by year end. The private vends that operated the same till a few months ago have been completely excluded from this network and even old vends are not being allowed to participate. The policy would include licensing rights of liquor retail to four state government corporations, along with some premium retail outlets to feature high-end brands at key locations. These corporations would be asked to share 15% of their gross revenue at rent to the government with slight exclusions to the outlets inside malls. From the entire exercise, it is not yet clear whether the policy changes have come in due to commercial disputes with private vends or if it was a large-scale experiment to test waters for the technical overhaul of how liquor retail can improve in the national capital.
That’s a quick wrap for this week. You can also view and share the transcript blog of this episode at the link given in the description. If you’re interested in being on our podcast to share your retail experience or reflect on the new developments, you can tweet or DM me over Twitter at @geekprateek . Keep listening to us and do share with your peers in the retail ecosystem.
See you in the next one.
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