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Photo” Mint

Discretionary spending on verge of collapse

  • People are buying large quantities of food items and goods so that they can stay at home in the months ahead
  • Kirana stores are not taking safety measures to protect themselves and their employees and customers, says a B2B startup

Discretionary spending in some important categories has nearly collapsed, even as owners of kirana stores and other small retailers are going about their business without taking safety measures to protect themselves and their employees and customers, a business-to-business (B2B) startup said.

ShopX, which connects retailers with brands and manufacturers and sells software to help them manage their businesses, said demand for mobile phones and electronics at small retailers across India has dropped precipitously as people have woken up to the threat posed by the coronavirus in the past two weeks.

ShopX, though, hasn’t yet seen a major drop in business, as people are buying large volumes of products such as noodles, flour, soaps and other goods that could help them stay at home as much possible in the months ahead.

Still, a consumption slowdown is on the cards, chief executive Amit Sharma said in an interview.

To adapt to the changing economic environment, the company is entering new categories such as fruit juices, which are likely to see an increase in demand, and reducing its dependence on categories such as mobile phones that may face a sustained slowdown.

“In this environment, companies will have to be very agile to survive. So, we’re moving into categories that we had avoided. We’re also advising our retailers to take stock and make changes. One thing is clear: it cannot be business as usual," Sharma said.

While that is true, the nearly 200,000 kirana stores and small retailers on the company’s platform are yet to grasp the dangers posed by the virus. These retailers, most of which are based in small cities and towns, haven’t adopted hygienic measures to reduce the chances of spreading the virus.

To compel the retailers to act urgently, ShopX plans to launch an extensive awareness campaign across more than 100,000 kirana stores. It will distribute up to 400,000 flyers in regional languages informing its small retailers about the virus and recommending dos and don’ts. By distributing these flyers, it hopes to reach two-three million people, and encourage them to spread awareness in their families and communities.

“Every time someone comes to buy, the retailer will put a pamphlet in the shopping bag. We will also be giving sanitizers to the retail shops. Because unfortunately, it’s still status quo. So, we have decided to take the responsibility of converting these places from potentially being disease-spreading centres into awareness-spreading centres," said Sharma.

Over the past two weeks, after watching the virus explode into a pandemic in countries like Italy and US, Sharma said ShopX has also made rapid changes at the firm.

On 12 March, the company, which employs 1,000 people, shuttered its offices in Bengaluru, Pune and other cities and enforced a work-from-home policy for all its white-collar staff for an indefinite period.

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