Retail is one of the sectors most affected by COVID-19, in both positive and negative ways.
The unrelenting pandemic has turned the lives of the huge dealer network topsy turvy. Specifically, the small neighborhood shop, that has been around for decades and has been the livelihood of at least three generations in most cases. Perilously close to the edge, they are contemplating shutting shop and calling it a day. Take the instance of a city as Kota, referred as the coaching capital of India. The education sector is one of the major contributors to the city’s economy. The place is absolutely dead today, the economy brought to a standstill, as all the students have moved back to their respective hometowns. Or of New Delhi, where the smaller dealers are no longer propped up by a 30 to 60 day credit from manufacturers. They are not able to withstand the onslaught of the heavy discounts offered by the deep-pocketed e-tailers, the continued investments made by their parent company, and the new customers joining the bandwagon, especially those migrated from metros to tier 2 and 3 cities; nor the large family chains with huge pricing power.
The current crisis has transformed buying behaviour. The inhibitions of buying online are gone, and a transformation that would have taken two years has happened in five months. Premiumization, translating to larger screens and larger capacities is seen across the country.
The spike in sales seen in August, September, and October is unlikely to prompt an upgrade in growth projections for the current fiscal and help come to the conclusion that it is was not merely pent up demand but a lasting trend. In all probability, it is likely to subside after riding out the wave of festive demand. It may not be presumptuous to conclude that demand is rapidly shifting from a vast distribution network to the hands of a few, in this case large family chains, modern retail and online channels. As long as the 11.8 percent GDP projection contraction for FY 21 stays, it is too early to term it as a broad-based recovery.
We wish our readers, the vast dealer fraternity a Happy Diwali, and join them in their prayers that Goddess Laxmi bring them wealth and prosperity.