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Kirana store sales down 10-15% amid 2nd COVID-19 wave; consumer sentiment hits all-time low

Consumers are even buying fewer quantities of shampoos and detergents as people are not going out. Many people in urban areas have downgraded from larger pack sizes to sachet. Consumer sentiments aren't good in rural India too

Unlike the first wave when companies were unable to manufacture and supply chain mechanisms came to a halt, this time around there was no major disruption Unlike the first wave when companies were unable to manufacture and supply chain mechanisms came to a halt, this time around there was no major disruption

The first wave of the COVID-19 pandemic last year was a boom time for the neighbourhood kirana stores. As people increasingly stayed indoors and had no other avenue to spend, their average grocery bills saw a huge spike. They hoarded essentials too. This was also the time when most e-commerce platforms were unable to deliver due to the restrictions imposed by the government, and it was the friendly neighbourhood that came to the rescue of consumers. When most businesses de-grew, kirana stores gained market share by 6-7 per cent. The second wave of the pandemic, however, has been harsh on the neighbourhood grocers, who have seen a 10-15 per cent decline in sales.

Unlike the first wave when companies were unable to manufacture and supply chain mechanisms came to a halt, this time round there was no major disruption. Modern retail stores and e-commerce majors have been able to deliver too. However, consumer sentiments are at an all-time low. "Wave two has hit the industry harder than wave one. In wave one, consumers were spending 5 per cent of their household expenses on medical care. In the last two three months, average medical expenses have jumped up to 11 per cent of the total household budget," points out Arvind Mediratta, CEO, Metro Cash & Carry.

He says April and May this year have been worse than last year. "When the lockdown was imposed last year, there were not too many job cuts or salary cuts, there were not too many cases COVID cases either. Consumers enjoyed staying at home and spent quite a lot of money on groceries. This time around, COVID has hit families harder. People have lost their loved ones and are obviously not in a mood to spend. They are only ordering basic food and groceries," he further explains.

Consumers are even buying fewer quantities of shampoos and detergents as people are not going out. Many of them have downgraded from larger pack sizes to sachets.

Also read: Covid-led FMCG inflation stings middle class! 40% grocery costlier; edible oil up 50%

Prashant Reddy, the owner of Reddy Super Bazar, in a residential locality in Nagpur, is staring at a 70 per cent dip in revenues. He says consumer sentiments are low not just because of COVID-19, but also due to a steep hike in prices of essentials such as edible oil and staples. "A lot of people have lost jobs; therefore, they don't want to buy unless it is essential," he says.

Consumer sentiments are at an all-time low, agrees Prem Kumar, Founder and CEO of the retail technology company, SnapBizz. "With the supply chain mechanisms functioning properly, there has been no panic buying among consumers. That's the other reason there has been a dip in sales," explains Kumar. He says that there has been a shift from premium to mass in the case of brands and a preference for lower price products in the case of commodities. "People who buy 10 kgs of rice every month continue to do so, but they are now buying cheaper rice."

"People have adjusted their consumption habits. Even though prices have gone up, the basket has reduced and certainly spending on discretionary and premium products have gone down significantly," adds Amit Sharma, CEO, Shop X.

Consumer sentiments aren't good in rural India too. Unlike the first wave when there were not many coronavirus cases in rural India, this time around the pandemic has spread to these markets. "Rural consumers are suddenly spending Rs 4,000-5,000 on healthcare, this has impacted their grocery and other spends. Also, most of them are yet to receive the money the government has promised them, therefore they all the more cautious about spends," says Madan Padaki, Founder and CEO, 1Bridge.

Also read: India's $883 billion retail landscape dominated by kirana stores