Omicron cuts sales at offline electronics retailers by up to 70%

“Offline retail has been on the backfoot since the pandemic. As they began to recover, the fear of another Covid wave disrupted sales. Consumers are not coming to the markets after Omron. Arvinder Khurana, national president of the All India Mobile Retailers Association (AIMRA), said, “Sales have dropped by up to 70% in some stores.”

Khurana pointed out that there has been a 30-35% drop in sales in large format retail stores, which have thousands of products. Sales are down 50% in chain stores. In areas where the government has started imposing curfew and where cases have increased, sales have declined by up to 70 percent.

“January used to be a lean month. Omicron has further impacted sales. Manish Khatri, Partner, Mahesh Telecom said, there has been a drop in walk-ins by almost 50%.

Sales of some products have declined, but some stores have seen an increase in demand for laptops. In Vijay Sales, “Laptop sales pick up again. The overall sales have decreased by 10% as compared to the previous month,” said Nilesh Gupta, director of the firm. Mint previously reported that demand for notebooks in 2022 will be driven by commercial and government orders to support a return to work.

According to Khurana, in the last two to three months there has been a shortage of several key products, including iPhones, which are being supplied only to large retailers. Products for a brand like Mi are only available for a week. Chip shortage has also affected stocks. Smartphones under 15,000 are in short supply and 80% of them are now being supplied through online stores. Brands are also preferring premium smartphones due to the lack of chips.

“Online sellers have also advanced sales. Some of the sales which were expected to start from January 26 are happening 10 days back.” The gap between offline and online retailing has widened after the pandemic.

According to International Data Corporation (IDC), offline channels registered 18% year-on-year (YoY) decline in smartphone shipments in Q3 (July-September) 2021, while online shipments declined by 5% done. Khurana said that for the first time in decades, the offline market has shrunk by less than 50%. Online channels accounted for a record high 52% share of smartphone shipments in Q32021.

“Early reports indicate tension in offline channels. Uncertainty about restrictions and weekend lockdowns doesn’t help. Offline has been severely challenged since March 2020,” said Navendra Singh, Director of Research, IDC India.

Singh said the intervention of online platforms, led by heavy marketing and sales festivities, cannot be matched offline. Brands try to help but the cost of operating offline is too high to make it fully comprehensive. “There were some signs of recovery in October-November, which helped as it is a heavy selling period,” Singh said.

The Mobile Retailers Association has been seeking relief measures from the government. In 2021, AIMRA had urged the government to extend the interest-free moratorium by six months and allow collateral-free loans 25 lakh and 1 crore with minimum interest for retailers.

There has been no support from the government for offline retailers, Khurrana lamented. Retailers are running at a loss, especially as offline retail accounts for about 85% of their spending as fixed costs, which include salaries and rent.