Retailers are having continued growth in health and hygiene category products as well as in food, personal care and home care items, but discretionary categories like beauty and cosmetics, fashion and apparels have been affected adversely during the second wave of the pandemic.
Now, there is a renewed focus on healthy alternatives such as ayurvedic toothpaste and juices, while instant foods and ready-to-eat snacking items with nutritional offerings are also seeing larger penetration.
Moreover, value packs are doing well this time as smaller packs of Rs 5 and Rs 10 have witnessed a rise of up to 20 per cent across categories like biscuits, ketchup and jams, while the large and premium packs have been affected as people are cautious about their disposable income.
Besides, some retailers are also facing the issue of excess stocking in categories such as apparel, fashion and home care categories, as they had stocked up their inventory in March in anticipation of the upcoming season after having a good run rate in the January-March quarter.
“Spends have dropped in high price point and non-essential categories,” METRO Cash & Carry India MD and CEO Arvind Mediratta told PTI.
Future Group, which operates big format stores such as Big Bazaar and has now shifted mostly to home delivery model, said sales in the non-essential category have gone down after the second wave restrictions.
“Of course, sales of the non-essential category has been hit as you are selling only food and other essentials. Because of that, categories such as fashion and home are impacted very high.
“We have stocks but suddenly sales have gone down. The summer sales, which we were expecting in fashion, are now washed away,” he added.
Daily essentials such as fresh vegetables, staples and pulses; dairy products like milk; ready-to-cook items such as dosa barters; packed foods such as noodles, pasta and pickles are selling well at Big Bazaar, he added.
While Mediratta also points out that the restriction on store timing in the second wave and lockdown has “impacted business and is becoming a logistical nightmare”.
“By the time customers start walking in, it’s time to shut the stores,” he said.
The challenge has been on receiving stocks at stores, recording inventories and managing customer walk-ins within those restricted timing of 3-4 hours in most of the company’s operating states, Mediratta added.
According to Big Bazaar, on the delivery side, it is not facing any challenges but there is still a different set of rules city-wise and is creating confusion.
“We have ramped up our home deliveries but of course as a daily retailer, you have to keep figuring out the changes in the local lockdown and have to keep adapting to it. That is a challenge for us,” said a Big Bazaar spokesperson.
But, since it has now shifted mostly to the home delivery model, it has faced no problems in sales so far, he added.
METRO Cash & Carry is also witnessing a lot of online orders on its app, but timely delivery of orders to its kirana customers within these restricted periods was again a challenge, said Mediratta.
EY Partner and National Leader (Consumer Products and Retail) Pinakiranjan Mishra said this time, retailers are far more ready than the earlier lockdown.
“Supply chain is not a big issue this time,” he said. According to him, sales in some categories such as apparels would be a challenge.
When asked whether the big retail chains may face an issue of excess stocking due to increased inventory Mishra said, “It is possible that they have excess stocks and they would take more time to liquidate.”
Earlier this month, Avenue Supermarts Ltd, which owns and operates retail chain D-Mart, had said it having an “adverse and severe impact” on its revenues due to “significant disruptions” of its store operations from March 2021 onwards.
Besides, D-Mart may also have to face a challenge of “excess inventory” as with the receding threat of the pandemic and sales surge in the last two quarters, it had optimistically made plans.
“We currently continue to receive a regular supply of goods from our suppliers. However, this time we may have a problem of excess inventory. An issue larger than the first wave,” Avenue Supermarts had said in post-earnings statement on May 8.
The receding threat of the pandemic and consequent sales surge in the third quarter and most of fourth quarter, followed by the oncoming summer and back to school season, made us plan more optimistically.
“This could have a longer-term impact on our inventory to sales ratio as we could take comparatively longer time to liquidate the excess inventory,” it had added.
This time, several state governments imposed lockdown-like restrictions in April and are now extending to the May-end in their efforts to check the spread of coronavirus.