Covid-19 impact: Consumer goods sales go off track due to localised lockdown in the country – ETtech



Large manufacturers and retailers of consumer goods, smartphones and automobiles said sales have declined by about a third in the past week as localised lockdowns have been rolled out across the country to arrest the spread of Covid-19. That’s reversed the gains industry had made in June after the nationwide lockdown imposed in March was eased. Pune and Bengaluru are among the cities going under lockdown.

If such intermittent closures keep getting extended by local administrations, demand for the entire quarter could be impacted, said executives across sectors. Operations and business plans are being thrown off kilter, they added. “Sporadic lockdowns are disrupting operations and standard operating procedures, which are different for different states,” said Varun Berry, managing director of biscuits and confectionery giant Britannia Industries.

Bengaluru announced a curfew from 8 pm on July 11 through the weekend — shops had to shut by 7 pm.

Covid-19 impact: Consumer goods sales go off track due to localised lockdown in the country
‘Unable to Plan Inventories’

This was ahead of a lockdown from July 14 to 22 as coronavirus cases rise. In Pune, a two-phase lockdown has been imposed from July 14 to 23. In Uttar Pradesh, all markets need to close during weekends, the state government said on Sunday. In Bihar, only 50% of non-essential shops are being allowed to open.

“Weekend sales are down by 30-35%, especially in UP, Karnataka, Punjab and Indore, as markets are shut and there is no economic activity,” said Arvind Mediratta, managing director of the India unit of German wholesale retail chain Metro Cash & Carry. “The one-off lockdowns are hurting the revival the industry had seen in June and first week of July. We are unable to plan inventories or promotions because different states are announcing different types of shutdowns.”

Read: Amazon, Flipkart get relief as Bengaluru lockdown comes sans curbs on ecomm delivery

Mobile phone retailers said sales in July have dropped 30-40% from June due to flattening of pent-up demand and mini lockdowns while supplies have improved. All India Mobile Retailers Association president Arvinder Khurana said the localised closures will hit the industry and there may not be any pent-up demand that will juice up the market when shops in these areas open up.

Adequate Stocks

While intermittent lockdowns cause disruptions in sales and distribution networks, some have built up adequate stocks with channel partners. “The in-market operations are likely to be impacted on a day-to-day basis in these specific geographies,” said Godrej Consumer Products chief executive for India and Saarc region Sunil Kataria. “In the long run, we expect sales would get normalised and we should be able to cater to a large portion of the demand.”

Lockdowns have hit manufacturing units and supplies could be disrupted for certain items in Assam and Tamil Nadu, Kataria said.

“We have built up an inventory for most SKUs (stock keeping units) and do not foresee any issues in sales immediately,” he said. “However, if lockdowns keep getting extended without an exemption to the FMCG industry, we might start facing some challenges.”

An ITC spokesperson said: “The lockdown announced in different states can cause temporary and localised disruptions to manufacturing and supply chain. However, given ITC’s distribution capacity, efforts have been made to ensure adequate stock availability across these states.”

The auto industry estimates a 10% impact on sales in the cities currently under lockdown.

“Whenever there is a lockdown of 7-10 days, obviously sales get impacted, customer sentiments get impacted,” said Tarun Garg, director, sales and marketing, Hyundai Motor. “Bengaluru, for instance, was doing very well. But now we will lose opportunity for 8-10 days. It (lockdowns) is not in our control — we are focusing on what we can do.”

Impact on Consumer Sentiment

The repeated reimposition of shutdowns could sap consumer confidence, companies said.

“There are some cities coming out of lockdown and at the same time new ones are getting added to the list,” said Naveen Soni, senior vice president, sales and service, Toyota Kirloskar Motor (TKM). “There has been an impact on sales in places where lockdowns have been reimposed. It is a matter of concern.”

In Chennai, for instance, where the lockdown has now been lifted, consumers are hesitant to come to dealerships, he said.

While around 85% of stores are open across the country, in the worst-affected areas such as Mumbai, just 25% outlets are functioning, said Vijay Babu, vice president, home appliances, LG India.





Source link

I consult companies as a Corporate Communicator where I help companies about the growth of the Chemical and Automotive Market and solve their companies’ growth and research challenges through my creative marketing strategies. Reach out to me in case you have something I can help with.