Large retail chains like Croma, Vijay Sales and Go Mobile are already shutting down stores in many cities amid plunging footfalls due to various advisories from authorities. Offline heavy brands like Vivo has already shut its flagship stores.
Ritesh Ghosal, CMO, Croma said that the retail chain has seen a massive drop in walk-ins, especially in Karnataka, Mumbai and Rest of Maharashtra, even as there is a shutdown of stores across due to various advisories. “We are running at around 60-70% run rate. Our online delivery is also facing challenges.”
“Currently, it is shutters down for all our stores in Pune and half of them in Mumbai. For Delhi, our stores in malls are down due to the government’s mandate. Gujarat and South India are still doing fine. Supply-side is no longer an issue because China is back on track with factories running at 75% capacity,” Nilesh Gupta, Managing Partner, Vijay sales told ET. “The bigger problem now is that demand has taken a hit since March 15.”
Gupta added that people are no longer in the mood of buying.
Reliance Digital, on the other hand, said it hasn’t ordered any shutdowns officially due to dwindling sales but some of its employees are voluntarily not coming to work to follow the government’s protocol on social distancing.
Mobile retailers association will soon write to the government seeking relief in the backdrop of cash flow decline. “Mobile retailers are under pressure to make payment for GST and advanced payments, and rentals. The government needs to come up with a plan that…people have stopped coming to shops,” AMIRA president Arvinder Kurana told ET.
Neil Shah, research director at Counterpoint Technology Market Research said that online as a channel may offset the offline downturn, as it was seen in China. “People who want phone will buy it since it is an essential thing to have in these times.”
Shah said that e-commerce players are likely to ramp up their delivery workforce to ensure delivery. “Delivery of phones is happening in urban areas.”
“Overall sales will definitely drop by 15% in March and more so in April. The drop could go more than 30% in the last 10 days,” Shah said.
But ET has recently reported, citing analysts, that even e-commerce marketplaces Flipkart and Amazon, where non-essential items make up over 70% of sales, are staring at a severe blow in the coming quarters, impacting their growth estimates.
Upasana Joshi, associate research manager at IDC, however, said that while the offline impact is apparent in tier 1 cities, it will soon reach the smaller town. “There is a cyclical demand drop as well, and sell out the number was slightly higher in February compared to last year as retailers started conveying that price will increase due to GST hike.”
Joshi added that smartphone brands have also increased TV ads since more people are at home and watching TV but with the upcoming sales approaching, it is unlikely to have a great demand even with deep discounting.
“We haven’t been able to touch even 50% our sales target this month. We are seeing hardly one or two walk-ins per days and we have sold a few models at zero margins,” said a spokesperson of handset retail chain GoMobile.