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Food & Grocery retailers see a big dive in sales during the April and May lockdown

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India Retailing, spoke to two leading retailers from down south – , Managing Director of Venus Group of Concerns, which operates the chain of stores in Kannur, Kerala and , Managing Director of Moddy’s Confectionery Pvt. Ltd, which runs the iconic 69 year old (Moddy’s) located in Ooty, Tamil Nadu – about the impact on business due to the lingering lockdown, the challenges faced by them during this period, and the prospects once the shutdown is lifted.

Food & Grocery retailers see a big dive in sales during the April and May lockdown

It is said that compared to non-food retailers, grocers have done good business during the COVID induced lockdown period. Your comments and reactions.

Veenish Kumar Uppot, Managing Partner, Venus Group of Concerns, which operates Sheen Bakery in Kannur, Kerala: Yes , it is true that the grocers have had more benefits in business in the past two months as compared to the non-food retailers. Groceries are an important part of our daily life, especially during a period of crisis like this. When staying in a quarantine, the requirements of groceries is more than ever. This fact alone has helped food and grocery retailers at many places score good business even during the COVID crisis and the ensuing lockdown.

But in our case, where we run a chain of bakery stores, our monthly sales from the food department has seen a major drop of 80-90 percent. It has been a really hard time for us with very less number of customers due to the crisis and the short period of timings for running the stores.

M. Muralidhar Rao, Muralidhar Rao, Managing Director of Moddy’s Confectionery Pvt. Ltd at Ooty, Tamil Nadu : At Ooty, this assumption about grocers doing good business during the lockdown does not hold true. During the first two editions of the lockdown (March 25 to May 4), the store was shut down most of the time. Occasionally, when some limited time of operation was allowed, there was some panic buying by customers and at that time the police disbursed the crowd immediately and the store was ordered to be closed. Further, the transport and incoming traffic of people was totally shut down. Due to this, tourist traffic was completely restricted and local people from the outskirts of Ooty, who are part of our regular clientele, could not access the store. Hence business was close to ‘nil ‘ in April and very marginal in May. Even the salary funds could not be generated.

Did any food products/ food categories at your store saw any increase in sales during the lockdown?

Veenish Kumar Uppot: As a bakery store chain dealing in bakery products, like most businesses that are hard hit and have suffered very adverse sales, we have had a similar experience, too. The number of buyers has reduced drastically during the crisis. Most of the prepared items at our bakery store got wasted as there were no customers. The sales dropped to nearly 80% from the pre-lockdown phase, which was a great loss for us. It has been a major drawback with the business running at a loss.

However, in our stores, food products such as breads and rusks have seen an increase in sales by almost 30%. Most of our customers prefer to buy these products fresh on a daily basis. Also, during the lockdown, we have seen more male customers visiting our stores compared to females.

M. Muralidhar Rao: There was no increase in sales at all in any of the products. In fact, there was zero sales of cafe products and other confectioneries like chocolates, bakery products, and ice creams.

Did you see any increase in orders for your online channel during this period? What was the percentage increase in your online customers before and after the lockdown?

Veenish Kumar Uppot: Yes, we did see a lot of orders on our online channel. There has been an increase of about 30 percent in online orders compared to the period before the lockdown. The customers prefer ordering online and we have employed door to door delivery and ensured the safety of the customers.

M. Muralidhar Rao: Ooty has seen a total shutdown; as such any transportation, courier service, or movement of goods was not allowed. Hence, the website was disabled and our online channel could not be operated.

There have been widespread complaints about retailers charging the maximum MRP on products and even charging more than the MRP from customers. Your comments and reactions.

Veenish Kumar Uppot: At a time like this, it’s sad to know that some retailers are charging the maximum MRP for the products or even more than the MRP. They may have reaped a lot of profit but at the cost of their customers, who are facing a hard time. As retailers, we are also facing problems but while we are not in a position to sell products at a discount, at least we are selling the products at a reasonable rate rather than exploiting the customers. We must respect the situation and try giving our best to our customers.

M. Muralidhar Rao: Whenever there was sales, the products were sold only as per MRP and as per the earlier practice without exception. Modern Stores maintains the highest standard of ethics for the past 69 years.

As a retailer, did you do anything innovative to incentivise your customers during the lockdown phase?   

Veenish Kumar Uppot: In keeping with the social distancing norms, we took a few initiatives. We employed only the required number of staff at the counters. We also employed more delivery agents for catering to the increased demand of the online channel. All staff members followed strict hygiene rules such as the using of masks and gloves and had regular temperature checks.

M. Muralidhar Rao: Since we have many regular customers, we took orders by phone and WhatsApp, and made home deliveries whenever possible. On many occasions, door delivery was also made after following the stringent procedures imposed by the authorities.

Tell us about your biggest problems and challenges as a retailer during the lockdown period and what solutions you employed to get over the problems?

Veenish Kumar Uppot: One of the biggest problems faced by us was in establishing the connection with our customers. We overcame this problem by increasing the network of our online delivery system. We employed delivery at a faster rate and as quick as possible for our customers and by following the no-contact delivery model. The staff too co-operated really well and helped us overcome the problem.

M. Muralidhar Rao: During the lockdown, the most difficult thing was reaching out to the customers and interacting with them. We even managed to source most of the commodities and products, but were stymied in making these products accessible to the customer.

Your opinion on how food and grocery retailing will change in the post Covid period in light of the fact that many food brands and companies have started selling their products by reaching to the consumers directly or through tie-ups with delivery start-ups like Swiggy and Zomato? What can retailers do to retain their foothold in the market and ace the new competition over distribution of food and grocery products?

Veenish Kumar Uppot: Personally I feel that there is going to be a major change in food and grocery retailing in the post Covid period. Customers wouldn’t prefer coming out to shop at stores and would prefer staying back at home and using the online platform for ordering their requirements. They would prefer the products to be delivered to them online. In this regard, we prefer delivering our products to our customers directly because it involves the trust of our customers and their satisfaction. Customer satisfaction is our motto and we prefer delivering the products directly to our customers instead of using the service of third-party delivery players.

M. Muralidhar Rao: Ooty and the Nilgiris is a unique market for the retail business. Most of the products are selected by the customer from the shelf after review and comparison. Shopping is a regular outing and past time. The customers and shoppers are also located in far-off places and they come with a fixed agenda and a to-do list of things. The delivery services have not yet made a good clientele for themselves and are mostly restricted to the takeaway food delivery services to tourists at resorts and hotels. Further, the other bulk of customers are the tourists who enjoy shopping at our store as a good outing and as a personal experience.

Hence, we do not expect any significant change in the retailing business at our place. However, we are well equipped and prepared for any minor changes in shopping and consumption behaviour. We too offer door delivery service to our customers who find it difficult to come in person and know our store well. We are confident that our display and service will carry us through and help us to maintain our business and also enable us to grow in the future also.
 
Another line of competition that modern trade retailers will face is from the increasing empowerment of the kirana stores wherein digital technology and other players are helping local kiranas find new customer bases, again through digital tie-ups and alliances with technology partners. How do you see this scenario changing the game for modern trade retailers?

Veenish Kumar Uppot: The empowerment of kirana stores is a good thing. They are emerging stronger with the help of technology and digital tie ups. Yes, it does throw a challenge for the modern trade retailers but it all depends on the customers. It depends on what they believe is the best for them. And how satisfied they are with the services of their retailers.

M. Muralidhar Rao: We are conscious of this move and efforts by some business houses. We are prepared for any change in the business environment. However, in our view, such changes could be mostly implemented in the Tier I and Tier II cities and will take quite some time to reach our town. Considering the unique nature of the retail business and customers at Ooty and its suburbs, it is felt that any such development will take a long time to get established here. The total business at our store is usually split equally between locals and tourists, and that will hold for the future as well.