Omicron: Would year-end holidays bring cheer to retailers, traders amid rising cases

Ease of Doing Business for MSMEs: The retail sector had already crossed the 2019 sales level in October and November this year.

The Delhi government has banned Christmas and New Year gatherings including religious, cultural, political, social and others. (Image: pixabay)

Ease of Doing Business for MSMEs: After Diwali, small retailers and traders have been awaiting the year-end period to draw customers further into the festive cheer and holiday spirits. Customers too have been willing to absorb the winter holiday vibes after Covid dampened their spirits last year. However, this was until the Omicron variant of SARS-CoV-2 was detected in India. Omicron cases in the country have spiked to 422 (as of December 26) in less than a month since the first case was reported on December 2 in Karnataka. Consequently, MSMEs currently are a bit on tenterhooks. 

“What we see on the ground as of now, things don’t look bad while caution is certainly there. If the situation doesn’t get worse, growth this season would be still on track while it may not be a big one. Moreover, end-of-season sale in markets will start towards the end of January, so people would be coming out. The only worry is that if people are not allowed to move out. Things as of now are still getting managed but it is not a perfect situation yet. We will have to wait-and-watch,” Kumar Rajagopalan, CEO, Retailers Association of India (RAI) told Financial Express Online. 

December sales would be critical for retailers and small store owners across segments by milking the year-end season opportunity as much as they could and ending the year on a high note. The retail sector had already crossed the 2019 sales level in October and November this year. While retail sales in October 2021 signalled 14 per cent growth over the October 2019 levels and 34 per cent growth vis-a-vis October 2020 levels, the November 2021 sales were 9 per cent up from November 2019 levels and 16 per cent higher in comparison to November 2020, as per data from RAI. 

“Unless there is scare in the minds of people, I think almost all sectors should do well. This includes domestic travel though international travel is a cause of worry as travellers come to India this time and Indians go to other countries while restrictions are currently there,” added Rajagopalan.

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The government had earlier this month extended the ban on scheduled commercial international flights till January 31, 2022. Currently, flights are operating under the bubble arrangement India has with 32 countries. The current list of ‘at-risk’ countries has Europe including the UK, South Africa, New Zealand, Israel, Hong Kong, Brazil, China, Botswana, Mauritius, Ghana, Tanzania, and Zimbabwe. At-risk countries are those from where travellers would need to follow additional measures on arrival in India, including post-arrival testing. The travel ban, as a result, had hit the hotel industry severely. 

“If there is no impact (of Omicron) then the overall sector can recover in the next six months but I don’t think there is any wherewithal with industry to bear another lockdown. We would urge the government to avoid any restrictions. Also, the Rs 60,000 credit scheme announced by the government is yet to be notified,” Pradeep Shetty, Joint Secretary at the hospitality body Federation of Hotel & Restaurant Associations of India (FHRAI) had told Financial Express Online. 

“New Year season may be impacted for travel, but marginally. The restrictions rolled out currently in domestic or international travel are not strict enough to change customer behaviour. Right now, the demand is higher than supply in travel, thus a bit of dropout in demand will not really impact the travel business in the short run. Though, things will be different if Omicron starts peaking from January onwards as predicted. Then, the travel industry may witness a massive hit and this time it may have some irreparable damages,” Nitin Jain, Managing Director, Protiviti Member Firm for India, told Financial Express Online. 

In other categories, Consumer Electronics, Durables, IT and Telephones (CDIT), which did not show significant growth in October, posted a 32 per cent improvement in November as compared to November 2019 as customers ended Diwali with some CDIT product purchases, according to RAI data. Moreover, the sports goods category reported a growth of 18 per cent and the apparel category indicated a consistent growth of 6 per cent compared to November 2019. Food & groceries and quick service restaurants (QSR) also continued to show growth, while categories such as footwear, beauty, wellness & personal care, and furniture too were inching towards recovery. 

However, with the surge in Omicron cases, the Health Ministry’ Secretary Rajesh Bhushan on Tuesday in a letter to all states and union territories had said that based on current scientific evidence, Omicron, which has been designated as a variant of concern by the World Health Organisation, is at least three times more transmissible than the Delta strain. Bhushan had written regarding measures required to contain the surge in Covid cases across the country. 

Delhi-based Sanjeev Madan who runs Bonton Opticians — a chain of optical stores — said the rise in Omicron cases has already started to impact the year-end business. “We are seeing a gradual reduction in footfall in the past few days from the daily average of 5,000-7,000 and nearly 10,000 on weekends. The market is expected to witness a turnover decline by 20-25 per cent during Christmas and new year holiday season. While all shop owners and employees are vaccinated and hence we can ensure appropriate Covid behaviour is followed inside premises of shops but it is difficult to ensure the same among customers in the market,” Madan, who is also the President at Lajpat Nagar Market Association, told Financial Express Online.

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“We had requested local administration to help us with police personnel to maintain Covid protocols in the market. However, if the Omicron cases rise further ahead, it would have an impact on marriage season and other festival shopping early next year,” added Madan. 

A day after the government’s letter, multiple states had issued new guidelines. For instance, the Delhi government banned Christmas and New Year gatherings including religious, cultural, political, social and others. Only 50 per cent seating capacity is allowed at restaurants and bars. Marriage-related gatherings cannot have more than 200 people. Likewise, in Mumbai, any gathering would be allowed to have only up to 50 per cent of the capacity in case of a closed space and 25 per cent in case of open spaces. Karnataka government earlier this week announced a ban on mass gatherings for four days from December 30 to January 2.

“Things looked fine on the ground even till last week but rising cases have caught everyone by surprise and now we are forced to believe that Omicron might have a 10-15 per cent impact on the turnover of traders across India this holiday season. FMCG, consumer durables, consumer electronics, food and grocery, beverages, toys etc., have already seen an impact at least in the last three days with the decline in footfall. Overall, there is certainly a lack of cheer among traders even as Covid protocols have to be followed to ensure there is no loss of human lives this time,” Praveen Khandelwal, Secretary-General, Confederation of All India Traders (CAIT) told Financial Express Online.

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