Nearly 10,000 mobile retail stores shut in the past year | Business Standard News

Clipped from: https://www.business-standard.com/article/current-affairs/covid-19-crisis-nearly-10-000-mobile-retail-stores-shut-in-the-past-year-121061600054_1.html

The north India region, the largest market among all four zones of the country, has seen the worst, according to market analytics platform PredictiVu, with close to 10 per cent of outlets closing

The western region, contributing nearly 30 per cent of sales, has seen 9 per cent of shops shut, followed by 6 per cent in the south and 3 per cent in the east, the smallest region in terms of sales

In the past year, thousands of handset retail stores – about 8 per cent of the total of 120,000 – have shut as a result of lockdowns and e-commerce giants enticing consumers with discounted phones.

The north India region, the largest market among all four zones of the country, has seen the worst, according to market analytics platform PredictiVu, with close to 10 per cent of outlets closing. North India typically contributes over 35 per cent of the total handset sales.

The western region, contributing nearly 30 per cent of sales, has seen 9 per cent of shops shut, followed by 6 per cent in the south and 3 per cent in the east, the smallest region in terms of sales.

PredictiVu analyses proprietary retail purchase data, digital trends, customer preferences and media spend at the micro-level on a real time basis. It sources data directly from retailers through its applications that are used by retailers in accounting and operations.

According to Arvinder Khurana, national president, All India Mobile Retailers’ Association, the lockdowns have delivered a knockout punch to retailers already struggling to keep afloat.

“A large section of retailers had to shut their businesses as bearing operational expenses was not possible. We don’t have the exact number of closures but surely a few thousand stores have shut down,” he said.

The data suggests that retailers in smaller towns have suffered more heavily than those in the metros. While the rate of closure in towns with a population of over 2 million is 7 per cent, it is 10 per cent in smaller ones.

Khurana alleges that a nexus of handset manufacturers backed by e-commerce players have played a crucial role in the closures. For example, most leading brands such as Xiaomi are launching new flagship models exclusively online. They never come anywhere near the shop shelves so customers stay away.

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Moreover, e-commerce players offer deep discounts that smaller retailers cannot dream of matching.

“As soon as the lockdowns have been lifted, e-commerce players are offering excessive discounts on handsets, while offline retailers are working at a five per cent margin. We can never offer such discounts,” said Khurana.

As though to illustrate his point, Amazon has been offering over 10 per cent discounts on the iPhone 12 series since last week.

The association has appealed to the union finance and commerce ministers, in addition to state departments, to create a mechanism to monitor ‘unfair trade practices’ by online retailers.

It also seeks a moratorium for offline retailers and the waiving of various taxes and charges which might help bring down their operational expenses.

According to industry experts, the constant migration of consumers towards e-commerce channels has led to a steady fall in the share of transactions at handset stores since 2016.

The data suggests that from 10 per cent in 2016, the share of e-commerce channels rose steadily to 35 per cent by end-2019.

The pandemic has accelerated this trend, pushing their share up to over 55 per cent in early 2021.

It’s possible that as more consumers start going out to shop after the second wave, handset stores will recover partially. PredictiVu estimates that they will be able to claw back some of the lost ground by seeing their share rise to 55 per cent by the end of 021-22.

That’s for later though. For now, in the first few days after re-opening, stores have not been able to capitalise on a reasonable number of footfalls because of a lack of supply from manufacturers.

“Most of them are supplying a very limited number of new models to offline retailers and diverting them instead towards online channels,” said Khurana.

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