How are retailers shifting strategies to cope with the third Covid wave?

The abject reality is sinking in slowly. We are in the throes of a third wave of Covid-19. The season of curfews and lockdowns is upon us, again, halting the country’s economic recovery. Unemployment rate is at a four-month high, retail inflation at a five-month high, and consumer sentiments are again on the downward trajectory. 

So, given the return of the virus and the fall in discretionary spending as evident in the Index of Consumer Sentiments, it is worth looking at the outlook for India’s retail sector. 

With weekend curfews failing to rein in the surge in Covid infections, there are murmurs of a complete lockdown in some parts of the country. Businesses, which have already seen the worst, are coping differently. 

Mom and pop stores have increased their inventory build-up by stocking up on daily essentials such as edible oil, sugar and salt. 

Retailers of consumer durables, however, have reduced buying from companies. They have noticed that discretionary demand has been affected because of the return of work-from-home (WFH). Hence, they’re now keeping a stock of just 15 days, as opposed to 30 days before. 

Other retailers too have witnessed a fall in demand due to weekend curfews. Premium cosmetics maker Lotus Herbals’ told a financial daily that sales through physical stores in metro cities were down 25%-40% year-on-year in the last two weeks. 

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Footwear and apparel brand Woodland also told the publication that sales were down 60% in the last fortnight because of curbs such as weekend curfews and reduced store timings. Hence, stocking up is out of the question here. 

With Covid-19 spreading rapidly in India, voluntary pullbacks on activity and state-wide restrictions are starting to bite the economy as evidenced by a fall in mobility, according to Nomura India

Meanwhile, modern trade stores of FMCG goods are in wait-and-watch mode and haven’t resorted to stocking up, yet. 

Devendra Chawla, CEO of Spencer’s Retail and Nature’s Basket, told Business Standard that fast-moving consumer goods companies don’t have issues with supply-chain logistics and consumers have also not resorted to panic buying.

Earlier 55-60 per cent of our sales were through the e-commerce channel, which has now changed to 75 per cent. E-commerce companies are stocking up on inventory ahead of the Republic Day sale: Avneet Singh Marwah, CEO of Super Plastronics, the branding licence for international brands like Kodak, Thomson, Blaupunkt, and Westinghouse. 

With consumers’ mobility being affected, many of them are now turning to ecommerce channels for their discretionary spends. And ecommerce players are stocking up ahead of the Republic Day sale later this month. 

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