Festive profits dim as retail dips by half

Beginning  with the demonetisation drive on Nov 8, to the week-long mourning period after Tamil Nadu Chief Minister J Jayalalithaa’s demise, the final blow has come in the form of the devastation wrought by Cyclone Vardah on Monday. The last 45 days have impacted business so hard that retailers are on a backfoot. Pushed to a corner, retailers are grappling to come to terms with the ground realities. 

Kumar Rajagopalan, CEO, Retailers Association of India, says “Last year, the December deluge was severe causing retail business to reel for over a week. This time, more than the cyclone, it is the demonetisation that has dealt a body blow. Modern retailers have been hit to the extent of 25 per cent while traditional retailers (cash intensive operators) have felt the impact by over 50 per cent.” 

Noting that efforts to restore the cheer and confidence among customers are crucial for retailers, the concern is more about the relationship existing between the banking and merchandising channels. “In Tamil Nadu especially Chennai, banks are not equipped to process transactions, particularly the high levels of business  that take place during weekends. They are not prepared to process it. It is for the technology partner or the banks to resolve these issues as for three weekends, we do not seem to find any betterment in the current situation. While banks are not refuting it, we have decided to approach the Finance Ministry to seek their intervention and help in this matter,” Kumar further said. 

The ‘unprepared’ nature of the e-commerce sector, in the context of a significant number of cash on delivery transactions has to be addressed, he said, anticipating the loss in the retail business to be in the tune of Rs 2,000 cr to Rs 3,000 cr. 

Princeson Jose, Owner, Prince Jewellery, says he has decided to withhold specific promotions in view of the current scenario. “With the CM’s demise and the mourning mood that prevails, we don’t want to do any specific promotion. However, our regular yearly campaigns will continue as planned and anyway, the wedding  season and other festivities for our business happens after January 15th when the Margazhi season ends,” he said, adding they typically spend Rs 1 crore to spur Christmas season sales. 

Meanwhile, a leading jeweller, it is learnt, is already in the final stage of signing up agreements with Jio, Airtel, Paytm, RuPay, Freecharge and UPI to boost its digital presence and penetration. There is a noticeable trend of purchases happening more vigorously during the weekend. “We are seeing a pick up in the digital transactions during the weekends now as many customers defer their plans owing to lesser availability of cash,” says an official, on condition of anonymity. 

“On the day of the cyclone, we closed 11 of our showrooms in Chennai, Kanchipuram and Tiruvallur districts and our estimated business loss would be about Rs 7 crore,” he says. 

The jeweller is however optimistic that the dip in gold rates plus the festive season in the  form of Christmas and New Year round the corner, are expected to increase the business by 20 to 25 per cent after a 45-day lull period.  “Around 75 point of sale terminals have been set up additionally in 38 stores and cashiers and managers are being trained to keep pace with the increasing need for digitisation,” he adds. 

It has also been learnt that retail major Reliance Trends, which has 17 operations in and around the city, ran on a skeletal staff on Monday, owing to which sales could have been affected. Giving us an idea of the potential losses that any major retailer faces owing to such shutdowns, an industry veteran and a source from within the company tells us, “Weekend sales in the large format stores at Chromepet, Adyar and Phoenix mall, ranges between Rs 10 lakh and Rs 15 lakh while daily sales are around Rs 5 lakh to 6 lakh. Reliance Trends outlets at Madipakkam and Tiruvallur usually report weekly sales turnover of Rs 12 to Rs 15 lakh.”