May 24, 2021
In the second wave of the pandemic., retailers have better growth in food, health, and hygiene category products as well as in personal care and home care items, but flexible categories like beauty and cosmetics, fashion, and apparel have been affected badly. Currently, there is a new emphasis on healthy substitutes such as ayurvedic juices, while instant foods and ready-to-eat snacking items with nutritional offerings are also seeing larger penetration.
Furthermore, value packs showing nice growth as smaller packs of Rs. 5 and Rs. 10 have seen a rise of up to 20 percent 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. But covid depleted the spend rate.
Future Group, which operates big format stores such as Big Bazaar and has now shifted mostly to home delivery model, and of course, sales of the non-essential category has been hit as you are selling only food and other essentials.
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
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.
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 but this time the supply chain is not a big issue.
D-Mart is 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. “
The receding threat of the pandemic and consequent sales surge in the third quarter and most of the fourth quarter followed by the oncoming summer and back-to-school season, made companies plan more optimistically. This could have a longer-term impact on the inventory to sales ratio as it could take a comparatively longer time to liquidate the excess inventory. 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.