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Covid cases derail recovery for retailers: report

Over January–February, retailers across categories, barring QSR and consumer durables, continued to deliver revenue below the last year’s base pre-covid. (Photo: Mint)Premium
Over January–February, retailers across categories, barring QSR and consumer durables, continued to deliver revenue below the last year’s base pre-covid. (Photo: Mint)

  • While the impact of fresh surge in cases and government restrictions have been muted on store operations, footfalls have seen a decline which, in turn, has derailed the month-on-month recovery in sales seen up to December

NEW DELHI: The second wave of covid infections has prevented recovery for retailers as state governments take steps to restrict mobility to curb the spread of cases.

The impact is more evident in categories such as apparel, according to a report released by Motilal Oswal Securities on Wednesday. Quick service restaurants and consumer durables retailers, on the other hand, have continued to see positive trends.

“Over January–February’21, retailers across categories, barring QSR and consumer durables, continued to deliver revenue below the last year’s base pre-covid. Apparel companies, particularly, reported the highest revenue declines compared to last year at 15–20%," the brokerage said in its report on the sector.

While the impact of fresh surge in cases and government restrictions have been muted on store operations, footfalls have seen a decline which, in turn, has derailed the month-on-month recovery in sales seen up to December, it said.

Retailers had reported swift recovery during the festival season last year, which had also prompted them to undertake store expansion.

But states are now putting in fresh curbs. Maharashtra has imposed a night curfew, malls and restaurants in the state are directed to remain closed between 8pm and 7 am. Gujarat too has imposed restrictions on movement at night in several large cities.

Such curbs will also likely dampen consumer sentiment.

Analysts at Motilal said they continue to see better trend in high-street stores and tier 2 and 3 city stores than large-format stores and those in metro and tier 1 cities.

Sales in March, however, could be at 100-110% of last year’s levels given the lower base of the previous year when India had entered into a strict lockdown.

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