Pakistan’s leading retailer Khaadi’s CEO, Shamoon Sultan talks to Kamran Khan on Samaa TV, about Pakistan’s retail sector amidst COVID-19. Sultan mentions the on-going issue is worldwide where recession has hit globally and it is not just Pakistan’s problem solely.
The Pakistani export community is also facing losses as they bring in revenue of about a billion dollars through international brands from the US and UK but due to the coronavirus pandemic their orders have either been held back, postponed and in some cases, canceled.
“Pakistan’s retail issue is very small compared to the others across the world.”
How does the Pakistani Retail Industry work?
1. Fixed Costs
The retail sector has high fixed costs to bear, salaries and rental payments make up the major components.
2. Supply Chain
The supply chain consists of two kinds of retailers in Pakistan, those who simply retail and the other who manufacture and retail as well.
How Does Pakistan’s Retail Industry Compare to the West?
“E-commerce globally is highly developed as compared to Pakistan, abroad the online sales contribution is about 30% or more while here it’s a mere 7 to 8%,” says Sultan.
The retail sector of Pakistan stands with the government on closing down stores to curb the spread of the virus however, he mentions that the retail industry has taken a huge hit, the next three months are all about survival.
According to Mr. Shamoon Sultan, the most profitable months for the retail sector in Pakistan are between March and August, since the two Eids fall during this time, 14th August, and the summer season that is longer and entails most buying. Almost 50-60 % of annual sales are made during this timeframe.
“Corona has hit us at our peak selling season and to survive it will be difficult.”
What Should the Government Do in order to rescue this retail Sector Amidst Covid-19?
1. Solve Liquidity Issue
The retail industry needs immediate liquidity to take care of all its components including production, stocks and suppliers. The central bank with the government need to make some changes and provide the retail sector with loans that will help the industry survive this pandemic. It is not just the exporters who have taken a great hit but us, the retailers as well.
2. GST Reduction
Last June sales tax went from 6% to 17% this caused the retail sector to fall into a negative 10% in the last year. If not a complete reduction, government needs to
3. Encourage further localisation, offer incentives at lower rates
Shamoon Sultan believes the country needs to move towards complete localisation and perceives COVID-19 as a great opportunity for it. Incentives must be offered at lower rates for more enterpreneurs to come into the market and further localisation to take place.
The mastermind behind Khaadi says,
“Pakistan has everything it needs to become self-sufficient, it just needs help from the government to get there.”
He mentions the revival of tourism industry after the pandemic is over is our ticket to survival, comparing to the UAE he adds, “People visit Dubai, to visit their malls, for shopping purposes and to visit cafe’s and eat good food. We have it all in Pakistan but it all simply needs organisation and these malls, stores and 100’s of cafe’s are the future of tourism in the country. “
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