Retail sales to regain bounce faster than predicted | Sunday Observer

Retail sales to regain bounce faster than predicted

26 July, 2020

Most retail businesses in Sri Lanka have returned to almost the level that existed before the break out of the pandemic, much faster than many countries.

Not only the predictions of experts but also public opinion at the early stages was that the recovery of the retail sector will take a considerably long period.  The tribute must lavishly be paid to the fearless political leadership, the health workers, the military establishment and Police, and the entire government service. If the leadership succumbed to various criticisms for enforcing unfavourable rules and regulations, the suppression of this pandemic would not have been possible.

 The retail sector makes a huge contribution of approximately 34% to GDP while employing millions of people. Despite the strong presence, this sector suffered a drastic hit due to the pandemic, particularly in April and May. Although there was a panic buying surge in late March, all retailers became non-functional with zero revenue. While larger players operated to limited extents with online selling and home deliveries, the small outlets of all types were completely shut down. As of today, although not at one hundred percent, the physical retail trade has shown an encouraging upward trend at a fast pace. 

 The country is witnessing a gradual but speedy recovery of retailing activities and a steady rebound can be seen in shopping footfalls in large and small outlets. Promotional activities of medium and large operators have recommenced islandwide boosting their sales volumes. The multi-speed recovery was supported by the resumption of work in the private and public sectors and reliable epidemic counter measures, which heightened public trust with the ongoing government assistance.

 Owners of many small grocery stores feared that they would have to close shop due to the uncertainty for which none could offer a solid and credible opinion. The authorities and industry experts were in the dark as the world had not experienced a disaster of this magnitude in recent history. Even though the world has witnessed several pandemics in the past, none spread as fast as Covid-19.

 Nevertheless, amid a troubling situation, timely and forceful decisions by President Gotabaya Rajapaksa and along with the commitment and dedication of all stakeholders, the situation was brought under control in a very short period. Hence, retailers heaved a big sigh of relief.    

 Many retailers, engaged in consumer trade, said that their retail sales movements are swiftly getting back to normal although not fully recovered. I had discussions with retailers of grocery and food-related products, pharmaceuticals, consumer durables, and also wholesale traders regarding the resurgence of trade. Almost all of them expressed highly positive impressions although some of them are experiencing minor setbacks.

Purchasing power

Almost everybody with whom I communicated expressed one common sentiment about consumer purchasing power. Even though the foot traffic of brick and mortar has almost entirely recovered, the degree of spending has come down to some extent. This means that customers are more careful when even purchasing essentials, common natural phenomena immediately after a disaster.  Most of the private sector establishments have resumed paying almost the full pay package to their employees.

 Footfall of grocery items including foodstuff at retail outlets returned to normal immediately after the curfew was lifted. The traders expressed confidence that the situation will improve rapidly further and will be back to normal when the general election is over. Pharmacies also are back to the previous levels of customer patronage amidst a few issues. A pharmacy owner said that being an absolute essential service, many customers purchased medicine in larger quantities than usual during the lockdown fearing uncertainty. 

 Textile retailers said that the retail customers are gradually increasing their visits to textile-related stores although not as much as groceries or pharmacies. As in grocery purchases, clothing retailers also are experiencing a reduction in the purchasing capacity of many customers. None of the owners of clothing stores I visited voiced extreme negative feelings. All of them are in the hope that they will recover sooner than expected.

 Most of these essential consumer retail owners have come up against a huge new obstacle in credit lines of importers and wholesalers. They say that the usual credit period they enjoyed before the pandemic is no longer offered. Almost all wholesale establishments have curtailed credit periods and some of them deliver only on a ‘cash on delivery’ basis.

 Hence, they are forced to reduce quantities.

 They believe that this practice will end  as early as possible.

The opinion of managers of supermarket chains is that there is a drop in foot traffic although the ‘basket value’ is fast recovering. They cited two issues. Customers who grew accustomed to buying goods from the neighbouring stores during the lock-down continue to patronise the same store. At first, the customers were reluctant to visit supermarkets as there were queues with other sanitary precautions that they were compelled to adhere to. The situation is much improved at present, according to them.

 A senior manager of one of the largest multinational organisations engaged in large scale manufacturing and importing, said that their sales volumes are 90% of what it was. However, he said that they are cautious of credit facilities offered to the retailers. They will, however,   re-evaluate the restrictions to return to the usual credit policies.    

Restrictions

Consumer durables in retail stores have shown a considerable spike temporarily, due to the government policy of restrictions on non-essential imports.

The general feeling of the common man is that the government will impose heavy taxes on items such as refrigerators, television receivers, washing machines, mobile phones, and other electric and electronic home appliances. Even when the ‘panic buying’ of these goods is over, the retailers in this sector believe that their sales will be back to normal soon.

 The overall picture of the rebound seems clear concerning retail sales of all types of products despite the occasional emergence of coronavirus patients. However, the citizenry must be constantly reminded that Covid-19 has come to stay, as predicted by experts, for a considerable period and that they must not drop the guard. Therefore, public awareness of the adverse effects of the virus must be up to date all the time and the new normal behaviour should continue with all outlined health practices.         The government has done its best to protect the public and to control the pandemic situation and it is the responsibility of the citizenry to keep it up.

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