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16 Apr

Pakistan’s retail industry is in crisis, there’s urgent need of Government help: CEO Khaadi Shamoon Sultan

Shamoon Sultan

Pakistan is amongst the 170-plus countries in the world, which are still under lockdown due to the coronavirus pandemic. The global economy is plummeting, the impact of which is obviously hitting Pakistan too. Subsequently the retail industry in Pakistan has hit a new low. The pandemic is swinging between being a healthcare emergency and a financial crises – both having equally devastating effects – shutting businesses and turning industries upside down.

Pakistan’s retail sector, and in this case fashion in particular, provides employment to hundreds of thousands of workers who face impending doom and possible unemployment if the sales curve doesn’t pick up. This is an industry that gives jobs to millions of daily wage earners and is a prominent section of Pakistan’s documented economy. In a recent interview with Kamran Khan at Dunya News, the host discussed at length how 65 lac jobs in Pakistan are in jeopardy due to the current status of the retail industry in Pakistan.

Kamran Khan shared that significant members of Pakistan Retail Business Council are some of the top brands of Pakistan, namely Khaadi, Sapphire, Gul Ahmed, Al Karam etc. “These brands pay almost 80% of the sales tax from the retail industry and contribute 19% to Pakistan’s GDP and 9% to its gross national exports,” he said, adding that “due to the COVID-19 pandemic, these brands are no longer in a position to pay for their rental spaces or clear their business debts.”

The host also pointed out that the government is providing financial help to every sector in Pakistan, except retail businesses. However, if this continues, all the mega shopping malls, for example, will shut down for good.

Speaking to Shamoon Sultan, the CEO of Khaadi, which has over 50 stores spanning in 20 cities across Pakistan, Kamran asked a series of questions about what major issues he is facing and battling to ensure the survival of Khaadi in this crisis. Here are the highlights:

 

What is the biggest issues your brand is facing?

 

“You have rightfully pointed out that we’re facing three issues currently; one is the coronavirus pandemic, second is the general sales tax and then the issue of liquidity. Retail sector is bearing the brunt of the crisis all over the world, not just in Pakistan, but foreign governments have stepped in to help the sector out,” he said.

“Exporters play a prominent role at this time. Big brands who contribute over 200 billion dollars to the economy are unable to take orders from their suppliers. The orders have either been delayed or decreased. In comparison to these big wigs, Pakistan’s industry is very small,” he added.

 

What are the mechanics of the retail industry in Pakistan?

 

“Our sales have dropped to zero. Retail industry works in a way that the fixed cost is very high; salaries and rentals are a major component of this fixed cost. Then we have the supply chain. There are two kinds of retailers in Pakistan: one who manufacture and then retail while the other only do the latter. Both kinds of retailers are in a dilemma,” he added.

 

Why aren’t they using the online shopping platforms to ensure sales?

 

“The government (especially in Sindh) is not allowing e-commerce sales for every commodity, only essential items have been allowed. If we get a green light there, then we may have some sales. However, it is pertinent to mention that e-commerce market is pretty developed around the world. Retailers abroad have almost 30 % contribution through e-commerce sales and the conversion is also very fast. Pakistan’s e-commerce contribution is only 7 to 8 % overall, which isn’t significant. Then there are delivery and payment issues which cannot be resolved during this pandemic,” he explained.

 

What would he suggest to the government to overcome this issues and ensure brand’s survival?

 

“We stand by the government in the decision that it is highly unlikely that shopping malls will be opened anytime soon. But the actual battle we are fighting is of survival. How are we going to survive in the next 3 months and then the whole year? 50 to 60% sales in Pakistan come in these 5 months, which include summer, the 2 Eids, 14th August and the entire month of August, making it a prime period for sales. Pakistan’s retail industry has been hit at this peak period. Retailers have stock in abundance and they don’t have the means to pay for it. The retail industry needs liquidity on urgent basis so that they are able manage their stocks and production,” he said.

“The government also needs to take another look at the general sales tax. The GST was increased from 6% to 17 % in June and I think it is unfair keeping the current situation in mind,” Shamoon added.

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The Haute Team

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