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Home >News >India >Rising covid-19 cases, curbs spell bad news for consumer demand

A surge in India’s covid-19 graph has several retailers and consumer goods companies worried as states move to impose partial restrictions, curb large public gatherings and order random testing at malls, a move that could dent consumer demand and stall recovery.

Retailers said they do not anticipate measures as stringent as the March 2020 lockdown but admitted they are watchful of the impact on consumption. Restricted store-timings is a major concern for most. The summer season has kicked off with a strong demand for cooling products, “but in case, there is restricted store timing, sales may get impacted," said Nilesh Gupta, director at electronics retail chain Vijay Sales.

If the covid-19 situation worsens, consumers may become anxious, affecting spends, said an executive at another consumer goods company. “The economy is barely recovering and it will be a big blow if the number of cases rise," the person said, requesting anonymity.

“The second wave is on us. It is we the people who need to take the onus of curbing its growth… The only recourse the government has is to impose a curfew or a lockdown, the impact of which we already witnessed in the first round. Lockdowns impact businesses, which in turn impacts livelihoods and individuals," said Dinesh Chhabra, chief executive officer at appliances company Usha International. Chhabra warned of the “grave snowballing impact" of lockdowns on businesses, individuals and the economy.

On Sunday, India reported 43,846 fresh covid-19 cases, the highest single-day surge so far in 2021. Maharashtra announced strict measures in several cities with the Brihanmumbai Municipal Corporation (BMC) asking for random testing at malls, railway stations, bus depots, markets, tourist places, and government offices. Meanwhile, Punjab has closed most educational institutions in the 11 worst-hit districts and has capped the number of people at funerals, cremations and weddings. Gujarat directed malls and cinema halls in Ahmedabad to remain closed on Saturday and Sunday and enforced temporary night curfews.

Retailers said the imposition of night curfew is bound to make recovery uneven across the country, especially for apparel retailers who are likely to close FY21 with a 40-45% drop in business. Every market is performing differently given the restrictions in a particular area, Benetton India managing director Sundeep Chugh said. “The markets that are under night curfew are on lower end of the demand scale because of limited shopping hours and thereby decreased footfall. Similarly, there have been few closures in select cities over the weekend, which of course has directly impacted sales," he said.

On Saturday, the Shopping Centres Association of India (SCAI) asked the BMC to reconsider its random testing rules for malls in Mumbai as it is likely to spread fear among the public, dissuade genuine shoppers who have slowly returned to shopping centres, and put into motion a spiralling effect on modern retail that could derail the recovery of the segment. The move could eventually lead to a complete shutdown for the industry and cause job losses, SCAI said.

Last week, Maharashtra also directed cinema halls, hotels, restaurants and offices, except those related to health and essential services, to function at 50% capacity. Film trade experts point out that there may be some cause of concern with Maharashtra being the heart of Bollywood, and current curbs impacting as much as 40% of box office collections. Overall, Mumbai and Delhi contribute 50% of the earnings of Hindi films. “More importantly, entertainment tends to be the last priority for people with such scary news and restrictions coming in. They would not want to take the risk of going out to the theatre when they aren’t even in the right headspace," film producer, trade and exhibition expert Girish Johar said.

Yet, most companies said they have learnt lessons and are better equipped to handle disruptions.

Lata Jha contributed to the story.

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