Retailers claim Rs100b loss from early closure

Caution decline in activity may reduce tax collection by Rs25b per week

LAHORE:

Following the first week of reduced retail timings, the Chainstore Association of Pakistan (CAP) has highlighted the serious challenges faced by the organised retail sector and urged the government to adopt a balanced approach to support formal businesses operating under increasing economic pressure.

The organised retail sector represents over 30,000 outlets and contributes significantly to the trade sector's 18% share in GDP, while supporting more than one million jobs. A key concern raised by the trade body is the restriction on retail operating hours, particularly the enforcement of 8pm closing time across most of the country and 9pm in major cities of Sindh and Khyber-Pakhtunkhwa.

Initial data from member retailers indicates a significant disruption to peak-hour sales (from 8pm to 10pm), with a drop of 25-30% in daily revenues. Consumer footfall remains concentrated in post-work hours, typically from 7pm onwards, highlighting a structural mismatch between current restrictions and actual behaviour.

In comparable urban markets in Asia and the Middle East, according to the association, retail outlets in malls and high streets typically operate until at least 10pm, enabling businesses to capture peak evening demand.

These disruptions were already translating into estimated business revenue losses of up to Rs100 billion per week, the retailers' body said, noting that the retail value chain was generating Rs3 trillion annually in sales and income taxes and any decline in activity appeared to be reducing tax generation by up to Rs25 billion per week.

The situation is already affecting operations, including staff cuts and constrained inventory cycles. Reduced retail hours may also fail to deliver proportional energy savings as consumption shifts to less efficient domestic use, while commercial establishments are more energy efficient and pay the highest tariffs.

CAP Patron-in-Chief Rana Tariq Mehboob stated: "Pakistan's organised retail sector is already facing multiple constraints, including rising costs, particularly fixed rents and overheads, increased regulatory actions and a lopsided tax burden on tier-1 retailers."