Working Capital in Retail: The firework you need for the Big Bang deals this Diwali

The rise of India's consumer market has meant that the retail sector has now emerged as one of the strongest pillars of the Indian economy. In fact, India is currently the third-largest consumer market in the world behind the United States and China. Consumer spending in India is expected to grow from the present $1.5 trillion to approximately $6 trillion by 2030, as per a World Economic Forum (WEF) report.

Several factors such as the advent of technology, rising income levels, the rise of a young and aspirational middle class, allowing FDI in single-brand retail, and the explosion in the e-commerce sector have contributed to the meteoric rise of the retail sector in India. A recent report by Deloitte and Retailer's Association of India (RAI) indicates that the retail sector is fast-emerging as one of the largest sectors in India and may touch Rs. 80 trillion in 2020 from the current Rs. 50 trillion.

One of the biggest difficulties faced by merchants is the timely availability of working capital. Traditionally, retail businesses require much more working capital in comparison to other industries. This is especially true during the festive and holiday season where there is intense competition in acquiring new customers.

Merchants need working capital for several reasons and some of these include:

• Business expansion (infrastructure upgrade, equipment purchase, technology integration)
• Discounting strategy for customer acquisition
• Advertising expenses
• Catering to bulk orders
• Managing sales fluctuations
• Meeting unforeseen expenses

With Diwali fast approaching, working capital is the firework that merchants need to boost their Sales. Having said that, there are several roadblocks that merchants face while arranging working capital.

Working Capital challenges for retailers

Few of the challenges faced by retail merchants in procuring working capital include:

• Lengthy documentation
• Collateral requirement (loan against property)
• Third-party verification
• Strong credit score
• New bank account requirement
• Delayed disbursements
• High interest rates

At Pine Labs, we are committed to empower our merchants to help them grow their business. We understand that timely credit can give the much-needed push to help merchants with their business growth. Through the Pine Labs Capital offering, merchants can avail quick and easy collateral-free loans. You can receive funds in your bank account within 48-72 hours of loan approval. If you are looking to make the most of the all-important festive season that requires rolling out heavy discounts for customer acquisition, reach out to us and know more about Pine Labs Capital.