Local arm of German retailer METRO Cash & Carry that runs 27 wholesale stores in the country selling staples, fresh produce and other packaged and household goods to small retailers, shopkeepers, businesses and restaurants, said the current three-week lockdown has disrupted movement of essential goods. Arvind Mediratta, managing director and chief executive officer of the company, who is also the chair of FICCI's committee on retail and internal trade and co-chair of food processing committee at CII, spoke with Mint about the covid-19 impact and what consumers are buying. Edited excerpts from an interview:
How has business been impacted for you?
The store footfall has dropped because of multiple reasons—customers are scared to come out of their homes or not allowed to come out, they are also not being issued passes. There is also a fear of getting harassed by the cops like our staff has been. The footfalls have dropped because of disruption in store operations. In some cities, we are allowed to open stores only until noon. In cities like Mumbai, we are allowed to operate for limited hours. We have been doing home deliveries from the beginning and continue to do so even today. For our stores in Surat, Amritsar, Jalandhar, Lucknow and Meerut, we are only given permission to do home deliveries.
What part of the broken supply chain is affecting you the most?
There are issues across the entire supply chain from—production to distribution. In the FMCG sector, a lot of factories shut down because of the lockdown, and consequently factory workers moved to their home towns. It is now difficult for them to come back, so production has been impacted for food and grocery products.
In the last one week, supplies of essential food commodities have been interrupted at various points—district, and state borders. With constant dialogue with authorities, these issues are slowly being ironed out. The Central government’s timely intervention has helped in the movement of goods at borders.
For FMCG companies, there is also a manpower challenge coupled by transportation issues. Furthermore, interpretation of the advisories at the state level is a major problem which is impacting the production for most companies.
Leading companies such as HUL and Britannia are only able to fulfil demand in Andhar Pradesh and Telangana, whereas Nestle and PepsiCo are falling short across the board.
In addition, companies such as Kellogg’s, L’Oréal, ITC, P&G are also facing issues for production.
We have close to 400 depots where suppliers send in their stock to further distribute to our stores. Out of these 400 depots only 30-35% are functional. METRO also works closely with small and mid-size companies to collect the stock of essential products from their warehouses to our stores. However, they are also facing several challenges.
Where do you think the bottlenecks lie?
Right now, what is considered as essential service is left to the discretion of the police officer and district magistrate on the ground, and they are taking calls which are different even in the same state. The biggest issue we are facing is that there is a central notification from the centre but the interpretation at the state level is very different. In UP—in Lucknow, they have one interpretation, while in Meerut and Ghaziabad they are separate.
What categories continue to be in high demand, and where are the shortages?
Metro has seen a surge in the sales of essential commodities such as rice, flour, vegetables, fruits, dal among others. We saw a big demand for personal hygiene and home hygiene products like mops, cleaning products etc. There has been a demand for kitchen products like pressure cookers, plastic containers etc as people are cooking at home.
We have voluntarily stopped selling non-essential products across all our stores.
As far food items are concerned, we will eventually witness shortage in pulses and whole spices as these items are largely transported from Rajasthan, Gujarat and Madhya Pradesh which were restricting movement of goods earlier. The demand for packaged food products like biscuits and noodles is likely to see a spike but since the production is hit, there will be a shortage.