Covid-19 impact: It’s the best of times and the worst of times this Diwali

“We have already reduced our orders by 40%,” said Siddharath Bindra, MD of Biba Apparels that operates more than 200 enthnic wear stores. He said like Biba, a lot of retailers are slashing orders for August to January months. “Obviously there is n...

Agencies
The impact is felt by the Clothing Manufacturing Association of India and the group said Diwali orders from retailers currently are “negligible.”
New Delhi: It’s the best of times and the worst of times this Diwali. While the festival of lights has sparked surging demand for consumer durable and electronics industry that is working to meet demand for everything from smartphones to refrigerators, fashion and lifestyle retailers are paring orders amid a demand slump.

Apparel vendors nationwide that service the vast number of mom-and-pop shops and small retailers that controls almost 70% of the Diwali apparel markets said orders for Diwali has shrunk to about 30% this time from last year. Larger players like Biba and Manyavar – that also rely heavily for business in India’s biggest festive season - are cutting productions and orders by almost 40% for the current fiscal year ending March 2021.

“We have already reduced our orders by 40%,” said Siddharath Bindra, MD of Biba Apparels that operates more than 200 enthnic wear stores. He said like Biba, a lot of retailers are slashing orders for August to January months. “Obviously there is no business. The lockdowns and shutdowns have left us with a lot of unsold inventory. So we have enough merchandise for Diwali.”


Bindra said he will gauge the consumer response in August and September to place orders for next summer season starting February 2021. In any case, he believes that order reductions would be 30-50% even for the initial months of 2021.

This is in contrast to the situation for electronic enterprises. Smartphones and consumer electronic goods makers like LG, Xiaomi, Vivo, Realme and Panasonic have advanced their festive season production plans by a month and will lift output to last year’s levels or even more. These companies saw double-digit growth in the just concluded online sales in Amazon and Flipkart.

LG India is scaling up production by 10-15% for the festive season and its plants are running two shifts and working Sundays. Dixon, a contract manufacturer for Xiaomi, Samsung and Panasonic, is expanding capacity for washing machines and televisions by up to 40% due to big orders from clients. Realme, Vivo and Samsung too have expanded production.
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Demand has outstripped supply for categories such as smartphones and dishwashers, even products like refrigerators, televisions and washing machines have seen sales rising 40-60% since May.

Executives at FMCG companies said festive demand pick-up is some time away since the main festive season starts only after two months.

RS Sodhi, MD of dairy giant Amul said “Demand for festive packs is still some time away. On Raksha Bandhan, though, we saw good numbers.”

Deepak Iyer, Managing Director, Mondelez India, said his company’s research showed that consumers are looking forward to the festive season.
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“The key concern is how the pandemic will shape up over the next few months and what will be their financial position,” he said. “How the festive season plays out will depend on these two factors. We are keeping a close watch on these factors to evaluate our actions closer to the festivals.”

Fashion and lifestyle retailers are keeping their fingers crossed stunned in the pandemic due to months-long lockdown and then closure of a chunk of their stores due to mall shutdowns and erratic opening hours in high-streets.
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A July survey by the Retailers Association of India said fashion, footwear and jewellery segments were among the worst retailing segments impacted by the pandemic generating hardly 30% of business compared to the same period last year.

Ethnicwear company Manyavar would generally clock about 25-30% year-on-year growth every Diwali but has scaled down expectations this year.

“We will be happy to if we generate 70-80% compared to last Diwali,” said Dalpat Jain, chief financial officer of Manyavar.

The impact is felt by the Clothing Manufacturing Association of India and the group said Diwali orders from retailers currently are “negligible.”

Every year, this is the peak production time for Surat-based sari and lehega choli supplier Manjula Fashions, but this year output is at about a fifth of its capacity due to lack of demand.

“Everybody is having a financial crisis at their own level so everyone is in spending less mode,” said Mayur Chheda, owner of the firm. “So it is having a direct impact on our business.”

Similarly, Mumbai-based salwar kameez wholesaler Khushi said orders have tanked by 75% this Diwali.

“It will at least take a year for us to cover our losses,” said Jitendra Gada of Khushi. “After that, we are hoping for a recovery and to earn something.”
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