The demonetisation of R500 and R1,000 notes has had an adverse impact on footfalls in malls, high streets and shopping hubs. In the online (e-commerce) segment, bulk of orders placed on ‘cash on delivery’ (CoD) mode are stuck as the buyers are facing problems to pay the bills.
Sales in some of the mom and pop stores have declined by as much as 80%. Some of the best performing malls said transactions have declined to the tune of 15% to 20% in the past couple of days. Most are expecting business to normalise in the coming week.
The drop in sale in case of e-commerce companies is around 30% and is expected to reach about 50% in the next two-three days because of the firms putting curbs on CoD orders.
Busy high streets like Linking Road in Mumbai’s suburban Bandra and bustling quarters like Crawford Market in the south were perceptibly less crowded in the past two days. Footfalls shrank in malls as well. “Footfalls have seen a drop of 15% to 20% in the past couple of days,” confirmed Mukesh Kumar, vice-president at Infiniti Mall.
Two mall developers told FE that in their assessment, sales of stores on an average have declined by an estimated 15% to 20% as consumers became choosy on the items they spent. Typically, about 60% transactions are made through electronic cards whereas 40% constitute cash payouts, Kumar said. “Cash transactions have declined by nearly half,” he explained.
“In our estimate, average sales would have declined by 10% for anchors and up to 15% in other stores,” said Anupam T, vice-president at Oberoi Mall. However, a clearer picture will emerge next week, he asserted.
“During weekends our malls clock 50,000-55,000 footfalls. We are expecting a 10-15% fall in footfalls in the coming weekend,” said Pushpa Bector, executive vice-president and head, premium malls, DLF Utilities. According to Bector, while overall there has been about 15-20% decline in business, transaction through digital gateways including debit/credit cards and payment through wallets have increased by 90% from earlier 65-70%.
The impact has been far deeper in the unorganized sector, with some mom and pop store owners stating their single day business declined by more than 80% one day after the major announcement was made. “On an average, small traders have seen sales drop of 80% and I expect that it will take a week for things to settle down,” said Viren Shah, president of Federation of Retail Traders Welfare Association (FRTWA), which represents more than 50% traders across Maharashtra.
Retailers like Shoppers Stop, Big Bazaar and FBB confirmed a decline in footfalls and a corresponding decline in sales but did not want to quantify any numbers at the moment. According to some estimates, apparel sales could decline by as much as 20% in the next one month. “Apparel sales have dropped by as much as 30% already. Overall we expect a 15% to 20% drop in sales because people will focus on discretionary spending,” said Rahul Mehta, president of the Clothing Manufacturer Association of India (CMAI), which has a membership base of more than 20,000 companies in the ready made garment and export industries.
Industry experts pointed out that jewellery and luxury fashion retailers will face maximum heat as people have a tendency to pay for these transactions with cash. Mehul Choksi, chairman and managing director of the Gitanjali Group, said that sales have slumped between 25% and 30% since Wednesday.
As for e-commerce companies, of the 30 lakh orders which are to be delivered under cash-on-delivery, from Wednesday, only 20% that is 24 lakh is expected to get delivered as the remaining orders will either get delivered or cancelled in the next three-four days.
“In case of CoD orders, in a situation where a customers does not have right denomination of currency, we have kept the orders at our last mile delivery hubs, to be delivered a few days later,” said Sivram SD, VP, corporate strategy and planning, Ecomm Express.
According to the logistic company currently 20-30% of the total orders are kept at its last mile delivery hubs across the country. It should be noted that on an average 10 lakh orders are dispatched every day by e-commerce firms. Of this 6 lakh orders fall under CoD.
Apart from large players like Flipkart, Amazon and Snapdeal, other e-tailers such as Zapyle which sell luxury brands have seen about 55% dip in its business in the last two days. “60% of our orders are delivered under CoD with an average order value of R12,500,” said Rashi Menda, CEO, Zapyle.