Covid impact 2020: Drop in consumer goods sales due to localised lockdown in the country
Huge manufacturers and retailer sellers of consumer goods, automobiles, and smartphones told sales have decreased by approximately a third in the preceding week as localized lockdowns have been reached out across the country to stop the spread of pandemic Covid-19. That changed the profits of the industry had made in June after the nationwide lockdown forced in March was raised. Bengaluru and Pune are the cities going under lockdown.
If such periodic closures keep getting raised by local administrations, demand for the entire quarter could be affected, said executives across sectors. Also, operations and business plans are not working correctly, they added. “Occasional lockdowns interrupt services and standard operating plans, which are changed for different states,” said Varun Berry, managing director of biscuits and confectionery giant Britannia Industries. Bengaluru declared a curfew from 8 pm on 11 July through the weekend, and shops had to shut by 7 pm.
We are unable to plan inventories
Before lockdown from 14 to 22 July as COVID-19 cases witness an increase, and in Maharashtra, the two-phase lockdown has imposed from 14 to 23 July. In Uttar Pradesh, all markets are requested to close during weekends, the Yogi-led state government said on Sunday. In Bihar, only 50% of non-essential shops are being permitted to open.
“The general sales are dropping by 30-35%, particularly in UP, Punjab, Indore, and Karnataka as business areas are closed, and there is no similar cash movement continuing now,” said Arvind Mediratta, administering head of the India unit of German markdown, retail chain Metro Cash and Carry. “The uncertain lockdowns damage the service business that had observed in June and the first week of July. We are helpless to plan inventories in light of the fact that various states are announcing various kinds of lockdowns.”
Mobile phone retailers told sales in July had fallen 30-40% from June due to flattening of decreased demand and on-off lockdowns while supplies have increased. All India Mobile Retailers Association president Arvinder Khurana revealed the localized shut down would hit the industry. There may not be any decline in demand that will juice up the market when shops in these areas open and resume back.
Adequate stocks are available in the market.
While on-off lockdowns cause disturbances in sales and distribution networks, some have developed adequate stocks with channel partners. Godrej Consumer Products chief executive for India and Saarc region Sunil Kataria said that the market services are supposed to be affected on a daily basis in these particular geographies. “In the long race, we are acquiring that deals can get regulated, and we are expecting to meet the huge part of the demand.”
Lockdowns have hammered manufacturing units, and supplies could be obstructed for several items in Tamil Nadu and Assam, Kataria stated.
“We have built inventories for most stock-keeping units and can’t predict any business improvements presently,” he included. “Besides, if lockdowns keep bouncing on-off in some districts with no opening to the FMCG business, we may occur going up against a couple of difficulties.
An ITC executive revealed: “The lockdown declared in different cities can induce irregular and localized changes to manufacturing and supply chains. However, given ITC’s distribution capability and efforts have been made to assure sufficient stock availability over these states.”
The auto industry expects a 10% influence on sales in the cities that are under lockdown now.
“When there was a lockdown of 7-10 days, apparently sales get changed, customer views get concerned,” said Tarun Garg, director, sales and marketing, Hyundai Motor. “Bengaluru was performing very well, but presently we will decrease the probability for 8-10 days. If lockdowns are not in our power and we are concentrating on what we can do.”
Impact on Consumer Sentiment due to the lockdown
The repeated imposition of lockdowns can weaken consumer confidence, companies told.
“Some states are getting out of lockdown, and at the same point new ones are making added to the list,” said Naveen Soni, senior vice president, sales and service, Toyota Kirloskar Motor. “There is a force on sales in cities where lockdowns have been forced again, and it is a subject of concern.”
In Chennai, where the lockdown has now been lifted, and the state moves towards unlocking, consumers are doubtful to come to dealerships, he stated.
While about 85% of stores are open across India, and in the worst-affected cities like Mumbai, just 25% of shops are working, said Vijay Babu, vice president, home appliances, LG India.