Truckers strike: Traders feel the pinch as retail stocks get thin

The nationwide strike of transporters, which began last week, is now beginning to impact supplies at traditional as well as modern trade outlets, especially in the north and west. The fallout of the supply crunch would be felt in a day or two, a cross-spectrum of retailers told Business Standard. Sales could be affected, they added, a situation that both manufacturers and retail trade are unhappy about.

“While Big Bazaar is well stocked for now, there could be a problem if this strike continues,” Kishore Biyani, chief executive officer, Future Group, said. “Not only have the big truckers called off operations (as part of the strike), our assessment is that even the smaller guys at the local level are not supplying any products. This feeder network is critical for retail,” he said.

Neville Noronha, managing director and chief executive officer, Avenue Supermarts, which runs the D’mart chain of outlets, said, “It is impacting our supplies severely. Though it is not reflecting in our stores yet, it will begin to show shortly.”

Wholesalers and retailers stock products for 10-15 days, since replenishment happens quickly. In some cases, trucks and tempos supplying essential items come in daily at stores, depending on how fast a category moves, a Mumbai-based distributor said. “In such an event, tempos not coming for days can impact sales straightaway. We are already seeing it for some packaged food categories such as biscuits,” he said.

Mayank Shah, category head, Parle Products, one of the largest biscuit makers in India, said dispatches from its factories to depots and warehouses were down 50-60 per cent, as much of this was outsourced to trucking majors. “Even the next level of transportation from warehouses to stockists, super-stockists and distributors is not happening. Naturally, this will impact supplies to the last-mile retailer – whether modern trade or traditional trade,” he said.

Ajay Gupta, managing director, Capital Foods, the maker of the Ching’s Secret brand of noodles, said he was feeling the impact of the transporters’ strike at two levels. 

“One is trucks supplying raw materials and ingredients to factories are not plying. The second impact is that trucks are not available to pick up finished products from the factory gate. It is difficult for us to hold on to finished stock for long.”

Logistics and distribution experts say a prolonged strike could force factories and production units to temporarily shut down operations, which could result in a revenue loss for companies.

This point was endorsed by Sunil Duggal, chief executive officer, Dabur India, who said a prolonged strike could affect sales in the July-August period.

For categories such as durables, the challenge is even greater, since a prolonged strike could affect sales in the festive season, a period that gives them a third of their revenue.

Typically, appliance and electronic companies begin to provide trade with finished goods inventory by early to mid-August for the festive season, which begins with regional events such as Onam (in Kerala), Ganesh Chathurthi (in Maharashtra) and Durga Pooja (in West Bengal). A transporters’ strike then can spell disaster, said experts.

Taking the load

• Retail, wholesale and modern trade is seeing existing inventory dwindle 
• This comes as transporters refuse to replenish stock due to the ongoing strike
• A prolonged strike could impact sales in the July-August period
• Even festive sales could take a hit in the future