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Amid coronavirus fears, hygiene products, staples fly off the shelves

Forum Gandhi Mumbai | Updated on March 20, 2020 Published on March 19, 2020

Online, offline grocers concerned about supply side issues even as sales soar in volumes and value

The paranoia around the coronavirus outbreak has created a boom in the retail and FMCG industry. In the past couple of weeks, retailers have seen a spike of 20-40 per cent in the sales for staples and over 400-500 per cent in those of personal hygiene products. The ‘panic buying’, however, is pressurising the supply chain.

Several countries have gone into a state of a lockdown. The Indian government has asked people to stay indoors as much as possible.

Surge in orders, value

Domestic online grocery delivery service Grofers has seen a 75 per growth in business pan India. “We have seen a rise in both the number of orders at 45 per cent and order value at 18 per cent,” said Albinder Dhindsa, co-founder and CEO of Grofers. “Cities like Mumbai, Bengaulru, Pune and Ahmedabad have seen a higher surge in business, with nearly 80 per cent growth, followed by Delhi-NCR and Hyderabad at 60 per cent,” he added.

BigBasket, another online grocery major, has seen a two-fold growth in its traffic and revenue in the past couple of weeks.

An industry player, requesting anonymity, said that their store had seen a 40 per cent growth in business.

Without quantifying the surge, a Future Group spokesperson said: “We have seen an upswing in the demand for daily essentials from our customers in certain geographies.” The group owns Big Bazaar and Easyday.

BigBasket has seen an increase of 15-20 per cent in basket value, said a spokesperson. The average ticket size for Grofers has seen an increase from ₹1,270 in February to ₹1,490 now, Dhindsa said.

According to Frost & Sullivan, the increase in sales is a direct impact of the closure of malls and the paranoia surrounding the coronavirus. “With people opting not to venture out or reducing stepping out of home, online sales will increase,” said Rohit Kulkarni, Principal Consultant, Visionary Science Practice, Frost & Sullivan.

Sanitizers, masks, soaps in demand

During the SARS outbreak, in 2002-04, laundry sanitisers saw a 90 per cent CAGR in retail sales value in China. Such a drastic increase in demand can be expected in this scenario, too, according to Euromonitor

The sales of face masks, sanitisers and gloves have soared in India. The demand for these protective products has skyrocketed to the tune of 400-500 per cent in the last 15 days.

Sandip Chhettri, COO of b2b platform TradeIndia.com, said: “In the last 15 days, the demand for sanitisers has increased 559 per cent; face masks 334 per cent; hand wash 81 per cent and disposable gloves 66 per cent.”

Along with the mask, “the demand for mask making machines has also surged by 250 per cent,” he said.

For Grofers, personal hygiene as a category has seen the biggest surge, including sanitisers by 400 per cent, hand washes by 120 per cent, soaps by 70 per cent, followed by floor cleaners. “High demand has been observed in disposable categories such as toilet paper, tissues and wet wipes,” said Dhindsa.

Staples category

The staples category has also seen a spike for both online and offline players. “Besides sanitisers and staples, we are seeing a huge hike in the ready-to-eat segment,” said the industry player quoted above.

Grofers has observed a spike in the sales of essential commodities like atta, sugar, pulses and rice. Also, products that are said to boost immunity have seen a 60 per cent sales growth. The company has discontinued promotions for essential commodities.

According to a BigBasket spokesperson, the company’s private label in the staples category is seeing an increase in sales. There is also a spike in the sales for fruits and vegetables.

Panic buying

Last week, a video on social media went viral where three women could be seen fighting over a pack of toilet roll in a supermarket. Eventually, the store had to ask the three women to leave without shopping.

This reflects a clear case of ‘panic buying’, said industry players and experts.

“Paranoia is easiest to set in when it comes to health-related issues, especially with a situation like Covid-19,” said Frost & Sullivan’s Kulkarni.

Harsha Razdan, Partner and Head - Consumer Markets and Internet Business, KPMG in India, added that when people are guided to social distancing, it is logical to expect them to over-stock on essentials such as personal hygiene products, staples and packaged foods. “The existing uncertainty around how the pandemic shapes up may result in a blip in spend by consumers in these categories,” he explained.

“In the last couple of days we have seen panic buying across a number of cities and categories,” agreed Grofers’ Dhindsa.

According to him, a lot of people are also trying to game the system to acquire items and hoard them.“We are taking a hard approach to hoarding of essential commodities. We are working proactively to block them and make sure essential supplies are available to genuine customers,” he added.

Supply chain and delivery

This panic buying may impact the supply chain and delivery time lines in the future.

According to Kulkarni, prices of surgical masks have increased almost 10-fold from ₹10 per mask to ₹80-100. E-commerce companies like Amazon and BigBasket have a supply shortage of sanitisers.

“Although we faced some disruption in the last three days, we have taken corrective action and have geared up for supplies to meet the increased demand. We will face some constraints for a few more days because it takes time to build capacity in terms of storage, delivery fleet and people,” said a BigBasket spokesperson.

Though Grofers has not seen any supply issue so far, the company is bumping up capabilities and hiring more people to ensure the availability of all essential goods. “We are working with more manufacturing partners to scale up the supply, while requesting customers to opt for considerate shopping so that shelves remain stocked for everyone,” Dhindsa said.

Published on March 19, 2020
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