If the retail sector collapses completely, it will greatly affect its larger eco system that depends on retail, penetrating deep into the length and breadth of the country.
The financial and social repercussions will be unprecedented and the loss of employment alone, will be disastrous.
The local retail sector accounts for over 30% of the national GDP and 14% of direct employment in the work force.
Over 10% percent of households in Sri Lanka depend on employment in the retail sector.
A large section of the employment in this sector includes sales, cashiers, and lower mid-segment jobs, which are vital to keeping the country’s economy afloat, and providing deeper penetration of income streams across the country as well.
Currently, many small and medium scale businesses are either closing down, or preparing for eventual foreclosure, while their larger counterparts continue to navigate through the prevailing conditions, under stress.
SMEs account for 52% of the local GDP and the sector is currently in dire need of funding in order to stay afloat.
However, those funds are difficult to obtain due to interest rates of up to 34%, which diminishes their margins greatly.
Additionally, given the import restrictions and inability to bring in adequate forex to the country, the future looks bleak for the whole sector.
Especially, as prices of food and other essentials would skyrocket as any smaller players would have to operate at much higher costs than normal.
Mr. Murali Prakash, President of the SLRA, commented on the current situation.
“It is important that we come together with authorities, policymakers and stakeholders and work towards replenishing the local retail sector, as it is the backbone of our economy.
The SLRA cannot stress enough the importance of making the retail sector a priority, as without it, the economy would further dwindle, as other sectors that depend on retail will also collapse.”
The Social Security levy charged on basic essential items have further increased the burden on consumers.
SLRA recommends to exclude the levy on basic essentials to provide relief to the consumers.
The SLRA urges the government and authorities to set up a system to facilitate the continuation of the retail sector business through a planned set of actions.
A 100% failproof framework based on monthly availability that could be considered to rejuvenate the retail sector would ensure imports and provide a means of managing the current uncertainty in the country.
The SLRA also advocates transparency on how retailers should operate amidst the current crisis.
It is imperative that frequent discussions by key authorities are taken place on a timely basis, as it is the only means of ensuring the survival of the local retail sector.