The neighbourhood grocery stores in Mumbai aren't empty in the current COVID-19 lockdown, however, a consumer may not necessarily get what she wants immediately. In all likelihood the store owner would tell her that the product isn't available and he would get it delivered the following day.
The supply chain and distribution mechanisms of FMCG companies and distributors aren't paralysed, but there is definitely a lag due to shortage of manpower. Reverse migration of labourers has led to a 15-20 per cent shortage of manpower, resulting in delays in products reaching the stores, say heads of logistics and distribution companies.
The labour problem isn't as acute at the factories as it is in the last mile delivery chain. "It is compulsory for us to get a RT-PCR test done for all our employees and when we do the tests we find lot of our delivery boys who have no COVID-19 symptoms testing positive. Some of the delivery boys are not reporting to work out of fear of contracting the virus. Having said that, the labour situation isn't as bad as it was last year," says Praharsh Chandra, Co-Founder and COO, Shadowfax. He claims that since delivery of non-essential products is not allowed, they are able to the manage the labour shortage by deploying the workforce dedicated for non-essential delivery to deliver essentials.
"The migration of labour is not at a crisis level, but it is certainly significant," agrees Amit Sharma, Co-Founder and CEO, Shop X.
Unlike last year, when kirana store owners came to the rescue of consumers by ensuring that their stores had basic essentials (they personally went to the distributor and picked up stock) through the lockdown, this time around they are battling with the fear of contracting the virus. "Many kirana store owners, especially in Maharashtra, are opening their stores for just 2-3 hours a day, as they are scared they would fall sick as COVID-19 infections are rapidly multiplying," points out Prem Kumar, Founder and CEO, Snapbizz. Since the stores are open for limited hours, the distributors also have a limited window to deliver products.
On the other hand, some retailers and distributors have begun to hoard products. "If you went to a cash and carry retail store two weeks ago, there were 50-60 retailers buying products on a given day. Today, there are anywhere between 300-400 of them buying products in bulk," says Ashish Kumar, Co-Founder & CEO, Near.Store.
In the north, hoarding is rampant at the distributor end, says Kumar Sangeetesh, Co-Founder, 1K Kirana. "The distributors are not letting stock go out of their warehouse so that they can increase prices when there is a gap between demand and supply. The price of edible oil has already increased by Rs 50 per case." If COVID-19 cases continue to surge at the current rate, Sangeetesh expects a labour crunch at the manufacturing units and thereby an impact on supply.
Another reason for shortage of products is that last year many kirana stores were not able to repay the credit they had availed from the distributors. "Most kirana stores work on a one-three weeks credit cycle, and since they were unable to repay, many distributors are not willing to extend credit. This is creating working capital problems for lot of the smaller kirana stores," points out Sharma of Shop X.
Gautam Kapoor, Co-Founder and COO, ShipRocket, says that the next 2-3 days will be crucial. "So far there is not much disruption, our people are being allowed to deliver. However, if the COVID-19 situation worsens it could impact supply chain and distribution."