Will your neighbourhood grocery store recover from COVID lockdown?

effect of lockdown on small retailers

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Footfalls of retail grocery shops dropped drastically during lockdown. File Pic: Pranshu Rathee

Anupama Provisions, Akbar Fruits and Vegetables, Kumar Mutton – let’s admit it,  not many of us can recount the names of the small retail shops right next to our homes. Standalone shops, vegetable and fruit stalls, some with carpet area of just 200 sq ft claiming to be mini-supermarkets.

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Never mind the obscure names of these shops or their enterprising abilities – when malls and supermarket chains in prime areas almost shuttered operations during COVID-19 lockdown, these corner shops became the go-to-outlets for the local residents to cater their daily needs.

Unlike many other businesses, these shops which sell essentials have been allowed to operate through the lockdown. But their footfalls too dropped drastically, their supply chains were disrupted, and many sustained severe losses as they got no movement pass during lockdown. Will it be easy for these small retailers to get their business back to pre-lockdown levels, or will they suffer long-term effects?

Retailers we talked to, said they take a cut of 8-10% on every sale on an average day, but this came down to less than 1% during lockdown.

Supply chain disrupted, prices soared

Among the thousands of corner stalls in the city’s residential areas is Shree Vinayaka Wholesale and Retail, near OMBR Layout, Banaswadi. Like most vegetable dealers, the shop owner Satish, 28, earlier used to collect supplies from KR Puram Market. But since the police limited activities in KR Puram, he has been collecting supplies from Electronic City.

“Onions and tomatoes are easily available and cheap because their supply is in abundance. But a bag of beans now costs Rs 950, as against its earlier price of Rs 350. Even the price of brinjal is almost doubled, to about Rs 300 per kilo,” he said.

Another retailer, 21-year old Madhu from Banaswadi, complained that only about 20% farmers from Kolar and other districts were allowed entry into the city due to restrictions on inter-district travel. So, while demand remained the same, the supply of vegetables reduced, leading to soaring costs.

While retailers complain of increased procurement costs, dealers say they face many constraints including the lack of labour. A 38-year old dealer at Yeshwanthpur APMC yard said, on condition of anonymity. “We send our usual truck to collect supplies of edibles, but it returns with only 50%, or sometimes 25%, filled. There were no labourers in factories or mills to process the produce. We just pass on to retailers and customers the transportation and labour costs we incur.”

When it comes to meat, prices had rocketed once lockdown started, but came down after BBMP fixed the price of chicken and mutton. Vijay Kumar, owner of Fresh Meat Zone, said transportation costs remain high and this has eaten into his revenue margin. However, in addition to the BBMP action, local competition too prevents him from increasing prices.

Meat shop owners say transport costs have remained high and eaten into their revenue margins. File Pic: Nikita Malusare

By large, retailers in the city also claimed that top brands like Britannia, Nestle and ITC halted their distribution channels. They say they’ve had little control over the supplies they get and making it available to customers.

“People ask for biscuits, cakes, Maggi, soaps, detergents and processed food. But we don’t have it. Big companies have asked us to directly come to their factories and collect it, but at the present we don’t have the manpower for this,” said a retailer.

Thanmaya Bekkalale, a business process consultant for FMCG companies, said it may take a few months for the supply chain itself to be back to normal. “Given that large FMCG factories and distributors face shortage of labour force, it may take 2-3 months for them to resume regular scale of production and fulfill orders. Inter-district and inter-state movement of labourers can resume only after government orders as well,” he said.

However the prices of branded items have not fluctuated, said Nasir, owner of Fab Supermarket at Singasandra. “But prices of locally available grocery items such as rice, dal and atta have increased by 5-10% or more”.

Footfalls have reduced drastically

At about 10 pm any day, Lokeshwari ensures that her husband and brother have taken their e-pass along before they leave for Electronic city to make purchases for their departmental store. The family-run Venkateshwara Farm Fresh at Uttarahalli has been around for six years. During lockdown, they procured vehicle passes for both their two-wheeler and four-wheeler.

However unlike earlier, Lokeshwari said it is no longer feasible for their store to operate through the day since there are few customers by afternoon. “The stocks arrive at about 4.30 am and customers start arriving by 5.30 am. People who are on their early morning walk usually get away with the fresh, best picks of the day,” she said.

She admitted that the footfall in her store has reduced by 25%, but says it could be because of change in customer behavior. “Due to the pandemic, people buy and stock fruits and vegetables for 3-5 days, to avoid outdoor exposure. They don’t come regularly, so there is no crowding and we can also operate independently,” she said.

The store has limited the sale of certain products. “We buy less stock of green leafy vegetables, unless somebody specifically orders it. That’s because such vegetables dry up early due to summer, and if they remain unsold, it will further affect our already-shrunk business,” she said.

Some retailers’ customer base itself is depleted. Bhupal, who has a small retail store at Indira Nagar, sells pulses such as rice and dal that he procures from wholesalers at Yeshwanthpur APMC. But given that most of his customers are either migrant workers from Andhra Pradesh, Tamil Nadu or from poor economic backgrounds, he has lost much of his business activity.

“The cost for which we procure from wholesalers these days is as good as the retail cost. About 90% of my customers either have gone back to their hometowns or are availing pulses under the government’s subsidy programme. So, I don’t have much business these days,” Bhupal said.

Lack of travel passes and home delivery too affected retailers

Despite being in business for 18 years, Bhupal says he was unable to get a movement pass during lockdown. “Getting a pass means investing an entire day or two at the police station. In our area alone there are 55 shops that trade rice and pulses like us. Traders are asked to produce all their paperwork at the police station. Petty shops like us don’t have paperwork intact,” he says, “Even after producing paperwork, there was no guarantee that we would get the pass. So we adjusted with whatever we could procure and sell.”

Nasir of Fab Supermarket faced the same problem. “Since our delivery guys didn’t get passes, they couldn’t go out and we had to stop home delivery,” he said.

Some others had to stop door delivery because staff themselves had left town.

Suhail, Assistant Manager at Families Supermart, Kanaka Nagar, said that by lockdown, a lot of young migrant workers who handled their delivery services had gone back to their villages.

On being asked why they weren’t recruiting services of food delivery apps, a retailer said, on condition of anonymity, that such apps are accustomed to a different revenue model and are expensive. “Unlike food apps, we don’t charge customers per delivery. If customers place orders worth a minimum amount, we deliver it for free. And under present circumstances, when customers are burdened financially, we can’t think of surging the costs,” he said.

On the other hand, Jafar, owner of Citi Food Center, said that his operations have been running smoothly because of his loyal customer base. The store has been around for some 20 years. The loss of walk-in customers was compensated by a surge in telephonic orders and door delivery.

“Prior to placing orders, we would clarify that we cannot deliver within 20 minutes and that it may take even over an hour. Also, due to lack of capacity, we door-deliver only essentials,” he said.

But he adds that taking telephone orders is not an easy task, “We get scores of orders simultaneously, and need experienced hands with clockwork precision. We need one person to receive the order over the phone, another to assemble the order, and two others to ride and deliver. In case of a wrong order or duplicate order, both the customer and store suffer.”

Thanmaya Bekkalale believes that among retailers, small players emerged clear winners during the lockdown. “Though e-commerce giants procured passes more easily, they didn’t have reserve inventories to distribute to customers. Whereas retailers at least made sure that customers could meet their daily requirements,” he said.

However, retailers believe that recovering from their losses is going to be a long process. Suhail said that recovery will start only when consumers feel confident about moving around freely in public places like markets. “Consumers have largely been buying only essentials, whereas items like soft drinks and cakes are retained by the store which is a waste of space and inventory. Even home delivery is not possible now given the lack of staff.”

Jafar concluded, “If anyone has worked as a FMCG retailer in these circumstances, it’s purely because of their service-mindedness, to retain their customer’s faith and to support the sustenance of their families. And not because of profit motive.”


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About Harsha Raj Gatty 22 Articles
Harsha Raj Gatty is Editor and Co-founder of StoryInfinity news agency (Subs and Scribes Media Ventures LLP).

1 Comment

  1. It is experienced that during lock down and even to day the ITC
    Brand cigarettes are sold a packet of cig costs Rs 100 is sold for 150.to 160 per packet of 10 cig. Concerned authorities should check the same at all retail shops who sell the items with premium prices.

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