With fewer footfalls in malls and shops and customers woefully short of cash, retailers could be staring at an estimated 25% drop in sales in November. “November was expected to be a weak month given Diwali was celebrated in October but the cash crunch has hurt sales badly,” Rajneesh Mahajan, vice-president, K Raheja Corporation, which owns Inorbit Malls, told FE. Ravi Kant, CEO of Titan, confirmed footfalls fell 20% in the initial days post-demonetisation.
The Tata Group-owned Croma Electronics conceded that there had been a steep 50% drop in footfalls immediately after the announcement but declined to comment on monthly sales. Top-performing malls in suburban areas of Mumbai such as Infiniti and Inorbit have reported a 20% decline in footfalls following demonetisation; the traffic in other shopping hubs too has been thin.
Since November 8, when high-value currency notes were scrapped, business has been off by approximately 25%, said Anupam T, vice-president, Oberoi Mall in Mumbai. Categories like international fashion brands, electronics and jewellery had been hit the hardest, he told FE.
On-ground channel checks, corroborated by sector analysts, revealed sales of footwear and apparel have declined by 25%-30% and that the jewellery segment has been badly hit. “Sales are down 50% so far,” said one jeweller. Mehul Choksi, CMD, Gitanjali Group, said sales had slumped by 30% in the first few days.
Luxury goods — handbags, watches and jewellery — are believed to have suffered the most, said Mukesh Kumar, vice-president, Infiniti Mall.
“The sentiment is such that people are not going to purchase high-value items such as a televisions at the moment. Those sales are not necessarily lost but certainly deferred,” said Arvind Singhal, chairman of Technopak. QSR companies like Yum Foods, Jubilant Foodworks have also been affected.
There are also those retailers that haven’t seen a slump. “Ethnic brands like Fab India, Biba, W, Global Desi and Raymond have been relative insulated since it’s the wedding season,” said Anupam T. Big Bazaar is believed to be doing brisk business as shoppers pay for their groceries either by card or electronically.
In fact, even in Tier II and III towns, those shops and establishments that accept cards are better off; in the midst of the wedding season they have managed to grow sales.
Associations that represent traders, the bulk of whom are affected, are far more vocal about the losses they are having to bear. “The gems and jewellery segment sales declined by 80% initially and considering the entire month will still be lower by 35%,” said Viren Shah, president of the Federation of Retail
Traders Welfare Association, which represents more than 50% traders across Maharashtra. Experts said that while people shifted to credit cards in branded stores, the trading community suffered as most transactions are cash-based.
According to Shah, initially, the per-day loss of traders was to the tune of Rs 300 crore, which has also improved in the past couple of weeks. Still, in the organised retail segment, there will be a hit on the top line despite robust festive season sale. “We expect a spike in recovery either in the fourth quarter or in the first quarter of the next financial year,” said one sector analyst. It is unlikely that the loss of business will as such have a bearing on the upcoming winter sale season, industry watchers opined.