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Year after Unlock 3: Anxiety still grips traders; no festival cheer

Rutam Vora Ahmedabad | Updated on August 01, 2021

Retailers cut down on stocking to save cash; event management sees steep decline

A year after Unlock 3, anxiety and fear haunt businesses in India, as Covid-19 linked uncertainties shake the confidence of traders, retailers, small businesses, restaurant owners and mall operators alike. And this, despite a slew of festivals being round the corner.

The devastating impact of the two Covid-19 waves and the threat of a third have created liquidity issues, eroded demand and made it unviable for many.

On August 1, 2020, as part of Unlock 3, the Centre had lifted the nationwide night curfew and relaxed restrictions for many economic activities outside containment zones.

Also read: Strict curbs needed in districts with high positivity rate: Health Secretary

A year later, the mood isn't upbeat for many business sectors. Restaurants and hotels, for instance, have been one of the worst affected. Rohit Khanna, Co-Founder of Food Entrepreneurs Alliance, maintains that restrictions on occupancy and repeated imposition of night and weekend curfews in many big cities have increased the uncertainty. “Business has dropped by 70 per cent in the past one year. Some survived by using their personal wealth and capital, but about 50 per cent of the restaurants, small and big, had to shut. This has a chain reaction on allied sectors of grocery, transport, packaging, etc. We pray that third wave doesn’t come, but the fear still remains,” Khanna says.

Retail biz

For retail businesses, the country’s largest employer with an estimated annual turnover of ₹115-lakh crore, the economic impact was worse than imagined. And their inclusion as MSMEs highlights their desperate need for access to credit under priority lending.

Praveen Khandelwal, Secretary General, Confederation of All India Traders (CAIT), an apex body of trade federations and associations, says it’s miserable for traders. “Most traders are facing a liquidity crisis. In February, the businesses had returned to about 60 per cent of normal level, but from March, the second wave started and the shutdowns and restrictions were back. In the last one year about 60 per cent trade business has been lost and this year doesn't look much promising either due to the uncertainties," he said.

Inventories shrink

On the business-to-business front too, festival inventories have shrunk. Traders are keeping just one-fifth of the normal inventory for want of cash and uncertain business during festivals amidst a possible third wave. Jayendra Tanna, President of All India Vyapar Mandal, says, “While essential commodities businesses are thriving, the demand in non-essential segments such as garment, shoes, fashion jewellery, and home furnishing, is still sluggish. Retailers are not stocking up, fearing money getting stuck. Ahead of festivals, we see fear more than optimism.”

In Hyderabad, Ramesh Reddy (name changed), a garment shop owner, says, “I don't have any plans to order for a fresh stock as I don't see much footfall of late, despite the upcoming wedding season. I see a lot of hesitancy in shoppers coming to the malls. We expected a better response when the lockdown was relaxed a few weeks ago.”

One of India's largest mall operators, Nexus Malls, sees its businesses reviving but not one hundred percent. Jayen Naik, Senior VP- Operations & Projects, Nexus Malls, says, “This time around, the customers who are visiting the malls are far more focussed on what they want and their dwell time is much less.” Nexus reopened all its malls since Unlock 2. "We have seen much better sales recoveries than last year. We are hopeful of closing July with around 70-90% sales recovery at a portfolio level. Fashion, Electronics, and beauty categories are showing highest sales recoveries,” he said.

Event management and the entertainment sector fear that the upcoming festival season would be a muted affair. Practically, the lockdown hasn't been lifted for event management players, say stakeholders. Concerts, theatres, plays or even family parties, religious events, corporate events have seen a drastic decline. “Most events have either been cancelled or gone online. We used to handle about 60 events a month earlier, but now have only 12-15. We don't see any sustainable business till December 2021. Hopefully, 2022 will bring things back on track,” said Keyur Sheth of Mumbai's Coconut Media Box.

(with inputs from KV Kurmanath in Hyderabad)

Published on July 31, 2021

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