Omicron disrupts sales for offline electronics retailers by up to 70%

“Offline retail has been on the back foot since the pandemic. Just when they had started to recover, the fear of another covid wave has disrupted sales. After Omicron, consumers are not coming to markets. Sales have dropped by up to 70% for some stores,” said Arvinder Khurana, national president, All India Mobile Retailers Association (AIMRA).

Sales have dropped by 30-35% in large format retail stores, which have thousands of products, Khurana pointed out. In chain stores, sales have dropped by 50%. In areas where the government has started imposing curfew and where cases have increased, sales have dropped by up to 70%.

“January used to be a lean month. Sales have been further impacted because of Omicron. Walk-ins have dropped by almost 50%,” said Manish Khatri, partner, Mahesh Telecom.

Sales of some products have declined, but some stores have seen an increase in demand for laptops. At Vijay Sales, “laptop sales increased again. Overall sales have decreased by 10% compared to last month,” said Nilesh Gupta, director of the firm. Mint had earlier reported that notebook demand in 2022 will be driven by commercial and government orders to support the return to work.

There has been a shortage of several key products over the last two to three months, including iPhones, which are only being supplied to large retailers, according to Khurana. For brands such as Mi, products are available only for a week. Stocks have also been hit by a chip shortage. Sub 15K smartphones are in short supply and 80% of them are now being supplied to online stores. Brands are also prioritizing premium smartphones owing to a chip shortage.

“Online sellers have also advanced sales. Some of the sales that were expected to start on 26 January are happening 10 days earlier,” he said. The gap between offline and online retail sales has widened after the pandemic.

Offline channels registered an 18% year-on-year (y-o-y) decline in smartphone shipment in Q3 (July-September) 2021 compared with a 5% y-o-y decline in online shipments, according to International Data Corporation (IDC). The offline market has shrunk under 50% for the first time in decades, Khurana said. Online channels accounted for a record high 52% share of smartphone shipments in Q32021.

“Early reports indicate stress in offline channels. Uncertainty around restrictions and weekend lockdowns do not help. Offline has been severely challenged since March 2020,” said Navkendar Singh, research director, IDC India.

Heavy marketing and sales festivals led interventions by online platforms cannot be matched by offline, Singh noted. Brands try to help but the cost of operations offline is too high to broadbase it fully.“There were some signs of recovery in October-November, which helped since it is a heavy sales period,” Singh said.

The mobile retailers’ association has been asking the government for relief measures. In 2021, AIMRA had urged the government to extend the interest-free moratorium for six months and allow collateral-free loans between ₹25 lakh and ₹1 crore with minimum interest for retailers.

There has been no support from the government for offline retailers, Khurana lamented. Retailers are operating at a loss, especially as about 85% of their expenses is the fixed cost of offline retail, which includes salaries and rent.