Retailers, restaurants cite air pollution for weaker December quarter sales in North India

Kolkata: In a first, large retailers and restaurant chains are citing air pollution as one of the factors weighing on corporate earnings in the December quarter, with many reporting a fall in sales in North India.

Shoppers Stop managing director Kavindra Mishra on Wednesday told analysts that sales were flat in the October-December quarter, with elevated pollution levels in northern India contributing to the slowdown. "The high pollution levels directly impacted footfalls," he said.

Other factors included some festivals falling in the September quarter and uneven discretionary demand, Mishra said.

High air quality index (AQI) levels tend to keep consumers indoors, resulting in lower footfalls, especially in open high-street markets.

Pollution in the North, specifically Delhi-NCR, has hogged the headlines for much part of this winter, with the region consistently recording 'very poor', 'severe' and 'severe+' air quality levels. Delhi's AQI has crossed 500 multiple times, forcing the highest level of measures from authorities to control pollution. The Supreme Court has also intervened on ways to control pollution this winter. Lifestyle International said footfall and sales growth in the North were lower than in the rest of India, which CEO Devarajan Iyer attributed to a possible impact from pollution. "The sales is bit low, though nothing alarming," he said.

While neither Iyer nor Mishra quantified the extent of the sales decline in the region, an industry executive said business in the North is down by 3-6 percentage points compared with the rest of the country.

Restaurant chains, meanwhile, said the impact has been severe.

Speciality Restaurants, operator of Mainland China and Oh! Calcutta restaurant chains, said dine-in business in the North fell by nearly 20% year-on-year in the last quarter, while growing 7-8% in the rest of India-a divergence squarely blamed on pollution. "Dine-in is all about happiness which is robbed by the pollution in the North, with schools and offices often working from home," said Anjan Chatterjee, managing director of Speciality Restaurants. "Surely, deliveries went up by 7-8% after we ran aggressive promotions on food delivery platforms due to the fall in dine-in, but that doesn't compensate due to aggregator commission. This fall in dine-in business continues in January."

Founder of a large restaurant chain based in Gurugram said cold waves elevated AQI levels hit open-air restaurants this season, "leading to a roughly 15% increase in deliveries, but not enough to offset the decline in overall footfalls."

To be sure, weather-related disruptions have been common in India. Last year, summer sales were hit by milder than usual weather, while the monsoon was severe in several parts of the country. Even this winter arrived later than usual across much of India. Shoe and outdoor gear maker Woodland said a strong winter helped support growth in the North, though footfalls did not increase. Managing director Harkirat Singh said evening fog may have played a role in keeping shoppers away.