Leading consumer goods companies estimate over 6,00,000 kirana outlets have shut shop in the Lockdown. Reasons for stores closing vary from cash crunches to the return of owners to their villages. In addition to the simple fear that they may not open again.
Small outlets are feeling the squeeze since distributors are now dealing in cash, instead of the 7-21 days of credit. The consumer markets fear these small closures will further delay the recovery of the sector post lockdown.
Parle Products released statistics stating close to 10% of 58 lakh small stores have shut shop in April-May 2020. The small stores used to sell tea, paan, and operate from home or roadside corners. Therefore, due to shutdowns of small stores, distributors have lost money whereas the owners of these stores barely break even. The closure of such small kirana stores will affect the reach of many companies. Although most shut outlets are small kiranas, 1-2% of the bigger kirana stores have also shut down.
If any of these shops reopen, it would be directly dependent on the control of COVID-19 outbreaks in cities. Such control could provide a sense of safety and therefore, the available labour to keep these shops running.
India has close to 10-12 million small retailers selling grocery and other fast-paced consumer goods. However, a large section of them are scattered and located in close-knit localities.
Amidst COVID-19 challenges, operational costs have more than doubled.
Therefore, owners would rather shut business than deal with fixed costs, migration of staff and delivery problems, etc.