Offline Electronic Retail Stores Experience 70 Percent Sales Decline
With Omicron on the run, consumers are seldom making it to physical markets when purchasing electronics, thus resulting in a 70 percent decline in sales for some stores, according to Arvinder Khurana, national president, All India Mobile Retailers Association (AIMRA).
In the words of Khurana, “offline retail has been on the back foot since the pandemic. Just when they had started to recover, the fear of another covid wave has disrupted sales. After Omicron, consumers are not coming to markets. Sales have dropped by up to 70 percent for some stores”.
Industry experts could not agree more, as the the rising COVID-19 cases since the dawn of the year have already begun affecting the sales of offline retail electronic stores which have just started to get back up thanks to the festive season sales.
According to Khurana, sales in large format retail stores with thousands of products have plummeted by 30-35 percent. Sales in chain stores have plummeted by half. Sales have decreased by up to 70 percent in places where the government has begun to impose curfews and where cases have surged.
Khurana lamented the lack of government support for brick-and-mortar retailers. Retailers are losing money, especially since the fixed costs of offline retail, such as employees and rent, account for around 85 percent of their spending
“January used to be a lean month. Sales have been further impacted because of Omicron. Walk-ins have dropped by almost 50 percent”, reveals Manish Khatri, partner, Mahesh Telecom.
According to Khurana, there has been a shortage of several critical products in the last two to three months, including iPhones, which are only provided to large shops. Products from brands like Mi are only available for a week. Chip shortage has also harmed stocks. Smartphones under 15K are in short supply, with 80 percent of them now going to internet retailers. Due to a chip shortage, premium cellphones are also being prioritized by brands.
“Early reports indicate stress in offline channels. Uncertainty around restrictions and weekend lockdowns do not help. Offline has been severely challenged since March 2020”, points Navkendar Singh, research director, IDC India.
Singh pointed out that heavy marketing and sales festival-led activities by online platforms cannot be matched by offline. Brands try to help, but the cost of doing business offline is too expensive to truly scale it. “There were some signs of recovery in October-November, which helped since it is a heavy sales period”, notes Singh.
The mobile retailers' association has been requesting help from the government. In 2021, AIMRA recommended the government to prolong the interest-free moratorium for six months and allow shops to take up collateral-free loans of up to one crore at low interest rates.
Khurana lamented the lack of government support for brick-and-mortar retailers. Retailers are losing money, especially since the fixed costs of offline retail, such as employees and rent, account for around 85 percent of their spending.