‘Small businesses slowed down in late March but didn’t stop and are now turning around with vengeance’
December 14, 2020 12:41 PM
Ease of Doing Business for MSMEs: Amid the Covid crisis, small shops rose to the occasion. Astoundingly, their deep legacy learnings of their local customers drove online businesses as well.
MSMEs in India have had a tumultuous year of subdued economic activity coupled with skyrocketing trade costs.
By Anurag Gupta
Ease of Doing Business for MSMEs: Covid-19 – the unprecedented crisis is all about resilience and hope. And as one of the modern world’s most influential business thinkers, Seth Godin said, small is the new big! In small steps, the world is making big strides to find an antidote for the pandemic. To reboot life and living from economic losses, the hardest hit small businesses are trying to make a comeback at least to the 2019 levels. These small retailers are riding the innovation horse, digitising double-time, and learning to leverage social media like never before. It is unimaginable that in normal times for these local businesses would one day become so customer-centric agile in execution, tech-savvy and futuristic in a matter of days, not months.
Late March, when India had just gone into lockdown, the media was rife with reports of the small retailers finding it difficult to cope with stocks and sales. Today, they’re increasingly talking about taming technology and social media to target customers. Here’s a small anecdote on what’s unfolding in this sector. Dhiren Cabin, an old, heritage teahouse of the Raj relic in an obscure north Kolkata neighbourhood has figured in blockbuster movies and novels but never served beyond 2.5 km of its radius. Swiggy-like door delivery was alien to its business; only walk-ins. That was till March 2020. This November, they were present on every food delivery tech platform possible; opened a Facebook page, and readily reached 25-30 km of city limits and beyond. It also opened its second outlet – after more than 70 years – bang in the middle of the Covid pandemic to expand its reach.
Amid the Covid crisis, small shops rose to the occasion. Astoundingly, their deep legacy learnings of their local customers drove online businesses as well. When entire India was under lockdown, they either became suppliers to online channels or the feet on the ground for delivery. Standalone, they kept the local economy alive.
Small businesses are part of a segment that is India’s second-largest employer – about 120 million — after agriculture. There are over 12 million small shops, according to Nielsen. And they fuel the country’s booming $650 billion retail phenomenon. Small shops compose businesses that eke their living every day from roadside pushcarts to neighbourhood groceries, to retail garment shops of Chawri Bazaar to online enterprises on the cloud. They contribute to a tenth of the country’s GDP. It is a growth machine for India, which slowed down in late March but didn’t stop. They’re now turning around with a vengeance.
Uniquely, the optimism never actually faded among these small businesses. Pivoted by strong support from the government – through timely, series of stimulus packages — and powerful entrepreneurial energy, the grit to get back steeled even further. Moreover, “India’s below-the-line stimulus (equity, loans, guarantees) has been better than the average developing countries during the pandemic,” as International Monetary Fund’s head Kristalina Georgieva observes.
Confidence amid the crisis
Data shows the small businesses in India have always come back strongly post any adversity. A survey that the American Express India and UK-headquartered market research and data analytics firm YouGov did recently confirm this fact. Four out of five merchants predicted that their business would survive, even if Covid-19 increased in their region. About 42 per cent of small business owners hoped to see consumer spending return during the three months of festivities. And 71 per cent of the surveyed said they were confident that they had taken measures to gain consumer trust.
Innovation has been a key ingredient to turning businesses resilient, and, thus, this optimism. If the fall was the hardest, the small businesses’ adoption of new ways of doing business was the quickest. The survey also reveals, 45 per cent of small businesses started accepting new methods of payments – like contactless payments; 43 per cent of the small shops taught and trained self and staff on maintaining safety in their stores; 37 per cent increased efforts to advertise on social media and a whopping 34 per cent started new methods of delivery, like contactless delivery methods.
Technology, digitisation, and social media helped to rebound. The Trade Promotion Council of India wrote on its website: “COVID-19 is simply accelerating a shift to digital payments that were already underway, and more and more companies are realising the cost of not taking the leap. Going forward, small businesses that leverage digital technology will be better positioned to ride the wave of economic recovery and lead growth from the front.”
A call to action
For small businesses to revive completely, consumers must return. Consumer interest in supporting small businesses is essential. Again, about 75 per cent of those surveyed say that in the current times they found consumers supporting small businesses to be useful. Practical factors such as distance, reliability of service are the main reasons for shopping from local shops. Customers too are turning more optimistic about spending. 63 per cent of customers believe their pre-Covid shopping habits will return in the next three-six months. And the government’s stimulus to boost consumption demand couldn’t have come at a better time for this sector.
Many organizations have come forward to support small businesses in many ways – provide recovery kits, conduct sanitization drives, digitally empowering them, and providing them access to technology. All this support is enabling small businesses of India to stay afloat during these unique times.
Anurag Gupta is the Head of Global Merchant Services at American Express India. Views expressed are the author’s own.