As a result of the enduring experience of Covid-19 pandemic worldwide, the retail industry is facing substantial shifts and the amount of retail sales has already dropped to a new low.
In particular, the consumer durable market will have a long term impact throughout the world according to expert opinion. Similarly, although consumer non-durables such as food and other essential consumables currently demonstrate a considerable surge, sustainability is questionable as a loss of income of the public at large. Therefore, retail sales of all three segments, consumer durables such as home appliances, furniture, motor vehicles, electric. and electronics non durables such as food, textiles, footwear, cosmetics, and services such as service stations, beauty parlours and landscaping will certainly undergo further ramifications.
All these factors mean that retailers are expected to be in an uphill climb for an indefinite period which will last from months to years. With continuously falling street sales and increasing online competition, retailers have to struggle and the existing negative impact has already lessened the chances of survival. The ultimate upshot depends on how efficiently the business segment responds to the situation during the initial post Covid 19 stage.
Rising online operations will further hamper ‘brick-and-mortar’ sales up to a sizeable level after almost two months of lockdown, where a considerable number of consumers practiced online home deliveries.
Almost all the planning done for retail selling in the year had to be completely reshaped by the emergence of the deadly virus. Colossal efforts by the state machinery to contain the spread in the midst of costly quarantine process, poor economic performance during the past few years, various relief packages offered to the public along with near freeze of global shipping and travel has placed the Government barely above water.
Odds of compensating or assisting existing retails business therefore has become non-priority as the Government is compelled to focus on more pressing issues. The ‘Just in time’ concept where companies principally maintained their stocks at minimal level and replacing the stock perhaps will no longer be valid, at least for a considerable period into the future. In order to apply this method, manufacturers need to move products quickly and efficiently across countries when it comes to imports.
Therefore, at least for the time being, Sri Lankan retailers will have to either stock more of the imported products or switch to local substitutes, which is the more beneficial option for the country’s economy. Along with the bans and restrictions on many non-essentials and the drive to promote the native industry, trade and services, the Government will certainly welcome the retailers swap to as many as local products.
Sri Lankan retailers of durables and nondurables have a little space to rely on imported products anymore. Many Sri Lankan entrepreneurs have already stepped out to initiate manufacturing to substitute the majority of imported consumer durables. They certainly may have to import raw material and accessories from overseas.
Nevertheless, with clearly visible intention of President Rajapaksa to promote native industry and trade, retailing companies will be compelled to increase localisation. Sri Lankan retail brands, searching for lessons out of the pandemic, will seriously consider integrating local supply chains.
The significant difficulty however, will be educating consumers on why the new local products are equal to or better than what was imported. The behaviour of Sri Lankans over consumer durables and even some non-durables such as food related products heavily leans on imported products. Consumers are currently predominantly accustomed to purchase products imported from either China or India.Over the years, they did not have a choice due to the unavailability of local products to purchase as most of these consumer durables were imported. Even if such local products were available, the general opinion was that they are inferior. Hence, an additional effort has to be made to change this mindset in order to switch the Sri Lankans to locally made products.
Gradual domination of online shopping which actually managed to beat general retail stores is a concern, although majority of Sri Lankans still prefer to visit and select durables as yet. However, during the lockdown period many mobile phone users started ordering online consumer goods, food related items in particular. Sri Lanka has a staggering 30 million mobile connections, more than the total population, of which 5.2 million were mobile broadband connections in 2018 as per the Telecommunication Regulatory Commission. The number must be much higher by now.
Many of these users can be persuaded to order products online if the relevant operators decide to do so. This can hamper retail store business for both durables and non durables. On the other hand, by entering into e-commerce, the retailers too can balance the growth of their business operations. Almost all large scale retailers are already engaged in online trading successfully.
Research reveals that while categories such as electronics, home appliances, books are being ordered online more often than products such as food, beverages and cosmetics are lagging behind.
A prolonged period of social distancing and other health restrictions will likely convince people to use the web to order even essential food products. In fact, there is a marked ballooning in retail online sales shown in demand for groceries during the curfew period.
D2C, DTC or Direct-To-Consumer brands had been in the forefront bypassing the standard distribution methods hitting almost every retail sector, covering consumer durables and nondurables. DTC movement of selling everyday items which used to be sold in a physical store, a showroom or a third party wholesaler, has become the future of retailing. This method offers greater convenience, typically through a subscription that ships the order directly to your door, often at a lower price as well.
The global pandemic is giving a noteworthy boost to DTC as consumers may most likely shift their spending from in-person to online.
Therefore, DTC brands will have a surge in business volumes immediately after the pandemic is over or controlled. Sri Lankans medium scale retailers will have to grasp the fact almost immediately and plan to offer online service, while running their physical stores.
Coronavirus pandemic has already smashed up the world in many unprecedented ways and will remain for an indefinite period, according to health experts. It will go down as one of the most damaging events the world experienced during the past few centuries.
However, Sri Lankan retail needs to prepare for the consumer behavior shifts after Covid-19.They need to adapt, develop, adjust and come up with fresh plans to face the challenge. The country will breathe a sigh of relief as China has opened the country in full and appears to be recovering faster than expected. With ongoing controls, Sri Lanka too will be on her path to recovery sooner than expected.