From malls to markets, Omicron curbs are beginning to bite - Economic Times

Fresh restrictions on operational hours at shops, markets, malls and commercial establishments and night curfews in various states are beginning to impact businesses of consumer goods companies and retail chains, company executives have said.

"The curbs are already impacting sales," said Arvind Mediratta, managing director of wholesale chain Metro Cash & Carry. "In Karnataka, for example, because of early closure of stores, we have lost two hours of business, and sales are down 10-15% now compared to the previous week."

Maharashtra, Delhi, Karnataka, Haryana, Gujarat and West Bengal are among states that have announced restrictions to curb the spread of Covid-19 amid increasing cases of the new variant of concern, Omicron.

The Delhi government on Tuesday announced a 'yellow alert' under its Graded Response Action Plan (GRAP) to fight the pandemic. As part of it malls and shops will be allowed to function on an odd-even basis between 10 am and 8 pm, cinemas and gyms will be shut, and restaurants and bars will function at 50% capacity only till 10 pm, which would dent businesses directly.

"There will be a 50% drop in sales due to restrictions and we have to sacrifice sales to offset rising cases," said Yogeshwar Sharma, chief executive of Delhi's Select Citywalk mall. "We have also been seeing non-serious shoppers over the past few weeks and the new rule could help contain crowd or discourage them. Both movies and fitness bring continuous footfalls to malls, which will now stop ,too."

The restrictions come amid one of the biggest shopping seasons of the year. Many brick and mortar retailers historically generate their highest annual sales between Christmas and first week of January.

"Business looked good with 14% increase in overall sales compared to pre-pandemic (2019) levels in October and 9% in November; that momentum may be lost with the restrictions," said Kumar Rajagopalan, chief executive of Retailers Association of India.

He said night curfews will have an adverse impact not only on the businesses, but will also dampen consumer sentiments. The formal sector complies to all regulations and so it is the first to take a hit when restrictions are put in place, he said.

Executives anticipate direct impact on out-of-home consumption, which had started to revive in the past three-four months with improved mobility, but overall sales of essentials may not be affected unless there are supply disruptions.

"We expect consumption at out-of-home and hospitality channels to get impacted due to restrictions," said edible oils maker Adani Wilmar chief executive Angshu Mallick. "However, demand and supply for essentials will not be affected unless there are newer curbs at factories or movement of goods similar to what we saw during the first wave."

Companies, on their part, said they are ensuring seamless supplies, manufacturing, distribution and logistics through increased monitoring and Covid-19 committees.

"We don't expect supply disruption or panic buying at general trade due to restrictions," said BK Rao, senior category head at biscuits maker Parle Products. "However, modern trade that has just revived could see an impact which in turn will shift sales towards ecommerce." Fast moving consumer goods companies, for whom seamless logistics is crucial for last-mile deliveries, are taking all possible precautions to deal with potential disruptions.

"Long-distance road transportation is key to supplies, and the trucking sector may be disrupted due to fears among drivers that they may not get basic supplies like food due to strict curfews," said Manish Aggarwal, director at sweets and snacks maker Bikanervala Foods. "However, we have strategies in place to lessen the impact on supplies."

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From malls to markets, Omicron curbs are beginning to bite - Economic Times
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