Retail Chronicles April 2020 Edition

Page 1

Retail

Chronicles Monthly Newsletter | Volume 5 | Issue 2 | April 2020


CONTENTS

03

TOURISM SECTOR

SENIOR TEAM

In this article, we'll see how Covid-19 will affect Tourism and Hospitality Sector

Bharat Gupta | Sachin Ghosh | Sagar Anam | Surabhi Upadhyay | Onkar Joshi

08

HUMAN BEHAVIOUR In this article, we'll see how Covid-19 will change Human Behaviour

CONTENT TEAM Abhishek Wakode | Parth Reshamiya | Keerthana Sontam | Bhairavi Sawant

DESIGN TEAM

13

AGRICULTURE

17

FOOD & RESTAURANT

EDITING TEAM

In this article, we'll see the impact of Covid-19 on Food Industry

Abhishek Wakode

In this article, we'll see the impact of Covid-19 on Agriculture & Supply Chain

Pushpak Holani | Ayush GoyalÂ


t c a p m I

m s i r u o T n o

r o t sec

- KEERTHANA SONTAM PGDM RM

Retail Chronicles | Page 3

April, 2020


COVID-19 IMPACT

The moment there is a long weekend people start planning various trips domestically as well as internationally. There has been a tremendous increase in the number of people who want to travel and with every increasing income levels people have more money to spend and thus a huge chance for the tourism sector to grow. But because of COVID 19 all industries are reeling but it is the tourism and hospitality sector that has been hit the most given all the border closures, travel restrictions, and lockdowns

Retail Chronicles | Page 4

IMPACT ON TOURISM AND HOSPITALITY SECTOR The COVID 19 outbreak gained momentum during the time when the summer break will start and many people Indians and Foreign nationals travel to and fro. There have been many long weekends as well due to which the travel companies were expecting to have a lot of inflow. But because of the lockdown on transport people had to cancel their plans leading to a 30% drop in the domestic travel this summer. The prices of airlines are also reduced by 20-25% which is leading the airlines to use up their cash reserves and thus leading them to the brink of bankruptcy.

April, 2020


According to reports, about 50 million jobs could be lost out of which, around 30 million would be in Asia, seven million in Europe, five million in the Americas and the rest in other continents. The impact of this will be felt on both white and blue-collar jobs. Drivers working were companies like Uber and Ola who earn their income based on the number of trips are also having a huge impact as the services have been suspended.

Domestic travel might resume with weekend stays, road trips, and domestic getaways but it will take a longer period for international travel to resume. Because of all these issues, the travel sector might as well be the last sector to recover.

Unlike other sectors that will start functioning the moment the lockdown is lifted, the tourism sector will take a longer time to come back to normalcy as people will need to ensure that the situation is safe and secure before they travel.

Retail Chronicles | Page 5 Retail Chronicles | Page 5

April, 2020 February, 2020


Predicted employment loss in the travel and tourism industry due to the coronavirus (COVID-19) pandemic worldwide in 2020, by region

Job Loss in Millions

50

40

(in millions) (source: statista.com)

30

20

10

C ar rib ea n

Ea st M id dl e

Am er ic a

La tin

Af ric a

Am er ic a

N or th

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Eu ro pe

As ia

Pa ci fic

0

April, 2020


WAYOUT Â For the sector to survive experts in the sector suggest tax and compliances related to fuel and plane charges have to be discontinued, relaxation on loans, waiver of property and excise taxes, short-term interest-free or low-interest loans for rebuilding business, etc. Companies also have to do their share to help rebuild the business. For example, employees in companies like Makemytrip have decided to take zero salaries from April and the rest of the leadership has offered to take a reduction of 50 % in compensation, so as to help the company recover from losses. Uber has decided to provide a 25 crore grant to its drivers in India.

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Even though the situation seems dire for the sector, travel companies can utilize this lockdown to become digitally active. They can keep interested in destinations alive so that consumers have a desire to travel to places after the restriction are lifted. Since people are stuck at home and digital and social media usage has gone up significantly (by 1.4 %), this is the right time to get people’s attention and get them to think about visiting destinations. Some examples of companies utilizing this channel are given below. So let us hope that the companies keep the spirit of travelling alive and make a speedy recovery and help everyone have the best experience of travel once again.

April, 2020


Change in Human Behaviour - ABHISHEK WAKODE PGDM RM

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April, 2020


How COVID-19 will change human behavior ? COVID-19 is probably the biggest global event—and challenge—of our lifetimes. As such, it is changing human attitudes and behaviors today and forcing organizations to respond. However, the need to respond won't end when the virus's immediate threat eventually recedes.

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Imagine it's September. Things are back to normal. We can meet face to face. Travel is possible. Products are easy to buy. But things have changed. COVID-19 has forever changed the experience of being a customer, employees, citizen, human. Ranging behavioral changes are expected to be seen. What will have changed in the way we think? How will that affect the way we plan, communicate, build and run the experiences that people need and want? The answers to these questions will lie in the way people react and how individuals, families and social groups (all sources of creative innovation) hack new ways to live.

April, 2020


1.The cost of confidence

2. The virtual world

An explicit message of COVID-19 is that other people/places can carry an invisible threat. Deciding on what to do —especially concerning large decisions, such as holidays and where to live or work—is becoming a more anxious process. Many purchases are being postponed. All of this will make people underconfident about taking risks. The erosion of confidence will make trust way more important than ever before. This will initiate a "trustbuilding system"— that, to be effective, will rebuild trust quickly and with credibility. The focus will be on building confidence through every channel. Optimistic behavior will sell well. All of this may change the nature of what we call premium products and services.

The worst of the pandemic has given a sudden boom to virtual working, consuming and socializing and will further give a tectonic shift towards virtual activity for anything. It will affect ways of communicating across learning, working, transacting and consuming. This will impact on everyone. Adoption of going digital by those who have already done it will be accelerated and a reduction of the obstacles will be required for anyone trying to go virtual for any sort of experience. Winners will be those who test and explore all of the related creative possibilities. Anything that can be done virtually will come into existence.

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April, 2020


3. Every business is a health business  People are sure to become health and hygiene conscious and this will be the next big thing for all the companies out there. The food and agriculture sector will need to maintain a consistent assurance of hygiene and cleanliness standards to make sure that people transact with them without any hesitation. Transport, mobility and tourism business will have to take one step forward to assure the customers about their safety in terms of social distancing and chances of infectious diseases. Every business will have to update themselves to satisfy the fear of people post-lockdown too.

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4. Cocooning Everyone is told to self-isolate means a return to home will be the epicenter of life and experience. At the height of the crisis, many workers are spending more time at home. After, this pattern will endure with meaningfulness and comfort carrying a price premium. There will be a rise in home spending— on the home and made at home as people will stay more local. A desire for cocooning, along with opportunities for those with creative strategies to enable it, will move into focus. Winners will be those who stay, work and innovate from the home.

April, 2020


5. The restoring of authority Dependence on experts and strong government recommendation—plus executive powers to start resolving the pandemic backed by citizen support— gives a real weight of responsibility to the central authority, which in many markets has been stripped off recently in popular culture. If governments get their handling of the crisis right, we can expect top-down control to be back in fashion; if not, the reverse. A reinvention of authority is likely after the effect of travel limitations, selfisolation and lockdown officially mandated by many governments. Greater acceptance for the role of government and companies in society, and the importance of collective behavior, may occur. India being the country with the second largest population in the world has never been accustomed to the concept of social distancing. A country where people are used to staying together in joint families now suddenly have to maintain social distancing. This is a tectonic shift for them. The concept of privacy of an individual will come into limelight and personal hygiene will be the biggest positive change that will flourish.

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April, 2020


9 1 d i v Co n o t c a p Im e r u t l u c i r g a PARTH RESHAMIYA PGDM RM

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April, 2020


COVID-19 IMPACT

After affecting many european countries, COVID-19 has started spreading in India. The Indian government has imposed a 21-day national lockdown to limit virus transmission. Around 10440 reported cases as on April 14, the spread of COVID 19 is still increasing on the last day of the 21-day lockdown. Due to this lockdown, The economic shock is going to be much more severe for India There are two reasons for this. First, before the spread of COVID-19, the economy was already slowing down, adding to existing problems of unemployment, low incomes, rural distress, malnutrition, and widespread inequality Retail Chronicles | Page 14

IMPACT ON AGRICULTURE AND SUPPLY CHAINS Although agriculture is free from lockdown, still it is disrupting some activities. Reports show that the nonavailability of migrant labor is interrupting harvesting activities, particularly in northwest India where wheat and pulses are being harvested. Because of transportation problems and other issues, there are disruptions in supply chains. Although consumers are often paying more, prices have declined for wheat, vegetables, and other crops for farmers. Some reports show that the closure of hotels, restaurants, sweet shops, and tea shops due to the lockdown is depressing milk sales. Poultry farmers have also been badly hit due to misinformation.

April, 2020


We survive on agriculture and normally a good harvest depends on quality seeds delivered to farmers by the seed sector. For a good harvest, it is important that good seeds and other farm inputs reach farmers in time for the Kharif season.Today India needs about 250 lakh quintals of seeds for the Kharif season. Normally The preparation of seeds happens between March and May. Due to the lockdown, supply chain is not working properly and most of the farmers are yet to receive the seeds for Kharif season. Today India has a large segment of small and medium seed companies that are working very hard to be competitive, and make ends meet. Normally They compartmentalize and outsource their work to various service providers, like, drying, packaging or storing, etc. Normally they take credit either from banks or private money lenders to run their operations. Even a slight spike in costs can sound like death for their operations.

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Now the distributor-retailer networks have also dried up due to lockdown, and hence companies are reporting low pre-booking numbers. Because of that, the prices of seeds sold by the retailers may also shoot up. But the worst-hit are the companies that have borrowed money privately. They will see mounting costs and interest rates, and they will be in trouble in near future. RBI Governor Shaktikanta Das had announced a three-month loan moratorium for all term loans, providing a massive reprieve to borrowers. The loan moratorium meant that borrowers would not have to pay equated monthly instalments (EMIs) either for the loan or on the interest for three months but, it will still be harder to come to the normal state after the lockdown.

April, 2020 February, 2020


WAY OUT Now, the government needs to immediately step in to stop harassment and violence by authorities. Although notification is there, in some areas police are forcing farm input shops - seeds, fertilizers, etc. to remain shut. Today, railways need to play a big role. First, they need to start transporting farm inputs including seeds, etc. from seed hubs to all states and grain and fresh produce to the cities and markets. The coaches - AC and non-AC can be used to transport smaller quantities and possibly even perishables. This will bring additional revenue for the railways and also can assist in food security concerns. Finally, the government requires a special stimulus package for the seed industry with a particular focus for the S&M companies. This can combine lowinterest or interest-free loans for the industry.These are terrible times, where we need strength and truth as the lodestar. We need to make learned decisions so COVID-19 doesn’t evolve to threaten our agriculture and food supply.

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April, 2020


9 1 d i v Co n o t c a p Im d o fo y r t s u d in BHAIRAVI SAWANT MMS

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April, 2020


COVID-19 IMPACT

The rapid spread of COVID-19 (also commonly referred to as “novel coronavirus�) has caused nations and organizations across the world to take emergency action in the interest of public health. Most companies are issuing statements advocating for consistent hygiene (handwashing and minimal face touching) aimed at containing the spread of the virus. Other companies are taking more aggressive action by instituting work from home policies and even travel bans.The food industry is particularly susceptible to experiencing a duel impact from the global outbreak, both in terms of domestic sales and supply chain disruptions. Retail Chronicles | Page 18

IMPACT INDUSTRY

ON

FOOD

.Many food manufacturers have foreign production facilities in China, Italy, and other locations where coronavirus has stalled the workforce, and in turn, the economies. And, because a timeline on a meaningful dissipation of the outbreak is so uncertain, manufacturers, distributors, and retailers must prepare to engage in significant deviations in their current approach, by considering diversions to alternative sourcing locations, and an increased focus on inventory management. For example, not surprisingly, grocery stores have seen a surge in demand for hand sanitizers, soaps, and other disinfectants, leaving many retails with empty shelves. April, 2020


The Trade Promotion Council of India (TPCI) on 23rd March, 2020 said there is an above 100% increase in demand in essential commodities such as rice, wheat and pulses. Other food categories such as confectioneries, sweets, organic processed food and spices have also witnessed 15-20% rise this month, the council said. The major destinations where Indian food sector has witnessed demand are the US, Europe, Australia, New Zealand, Israel, Palestine and Egypt, as stated by TPCI Chairman Mohit Singla. Indian exports are also getting enquires in the fresh/ dehydrated garlic, in the spices category- chilli, ginger and seed spices (cumin, fennel, etc), and sesame seeds/oil, owing to the supply Chain disruption hitting China due to the Coronavirus.

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There is a huge jump in the demand for food items from overseas as per TPCI.“Few big brands like Amul has said that buyers are facing the challenge to pay due to unavailability of banking channel.Another brand Dabur International said, all orders are on hold owing to the Covid-19 crisis,� the council said in a release. TPCI added that this surge is primarily driven by the fear that there will be shortage of food in the coming months and consumers have started hoarding essential food commodities. However, they added that there are also certain challenges for exporters, including shortage of containers, delay in vessels due to fumigation and noncompliance with norms of several countries,clearance delays, delay in advisories for not entering a particular port, and delay in payments.

April, 2020 February, 2020


WAY OUT As the COVID-19 scare grips the nation,another monster is lurking in the shadow, the one popularly known as unemployment. As the government orders lockdowns, some of the worsthit sectors include - restaurant industry, aviation and travel and tourism. Growth has slowed, investments are shrinking and consumption is sputtering. Restaurant industry is suffering significantly reduced consumption as well as disrupted supply chains. At-home consumption has increased, but outof-home consumption – which historically generates the highest margin – has come to nearly a standstill.. There may be long-term changes in customer behaviour and demand. The restaurant business in India stands at an estimated 4,23,865 crores. As much as 50 per cent of this will vanish if the number of coronavirus cases continues to rise in the country. Till date, 40 - 50 per cent of the restaurants have been hit and if the lockdown continues then the situation was bound to get worse, according to Anurag Katriar, President of National Restaurant Association of India.

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Zomato has come up with new and improved food delivery ideas to sustain in the bog of Corona virus. These ideas include Contactless delivery to minimize human contact, Curated restaurants that self certify to follow WHO advisory, Sanitization stations and temperature check of riders before order pickup, Photos of the restaurant kitchen for transparency. Zomato’s competitor Swiggy has also adopted same measures for providing No-contact delivery.So, we can always say that some businesses are taking real efforts to sustain and overcome these tough times Restaurant industry was booming before the corona virus spread, but the future for majority restaurants doesn't look bright because as soon as the world overcomes the COVID-19 virus scare, the general economic slowdown worldwide will drag the Indian economy down and that will push the restaurants downhill. Also, this pandemic will have a lot of positive impacts as well on the restaurant industry. There will be more focus on health and sanitation, there might be an increase in vegetarianism and there will be conscious dining due to these challenging times. April, 2020


Retail Chronicles is a monthly newsletter of Retail Lab, the retail committee of KJ Somiaya Institute of Management, Mumbai. Images used in Retail Chronicles are subject to copyright.

/retaillabsimsr @Retail_Lab @Retail_Lab

K J SOMAIYA INSTITUTE MANAGEMENT, MUMBAI.

retaillab_simsr@somaiya.edu +91 7838750090 +91 8805789445 +91 8619984820

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