Majority of retailers expect festive season sales to fall by 25%: Report

A majority of retailers expect festive season business this year to be down by 25 per cent compared to last year due to the impact of coronavirus pandemic and many of them are considering cancelling or deferring orders due to reduced festive forecasts, according to a report by consultancy firm BluePi Consulting.

As per the 'Retail Thought Leadership Survey Report 2020' by BluePi Consulting, 61 per cent of retailers are worried about inventory and wages, and 77 per cent indicated a shift of marketing spend towards consumer loyalty, promotions and discounts.

The survey, which was conducted online with organisations with over Rs 500 crore revenue, and took responses of more than 100 CXOs (top management officials), found that "60 per cent expect festive seasons to go down by 25 per cent versus last year".

"More than half the retail organisations have seen their forecasts for festive seasons go down 25 per cent or more compared to last year. Given that festival season sales account for a significant portion of sales book each year a downturn in the festival season sales would mean a longer road to recovery," BluePi Consulting said.

It, however, said while negative festive forecasts are pronounced in the apparel retail forecasts, 57 per cent of non-apparel retailers are interestingly optimistic about no or little change in the festive season sales.

Commenting on the findings of the report, BluePi Consulting CEO Pronam Chatterjee said, "The market sentiment has taken a downturn from being optimistic to border-line negative, due to the COVID proliferation beyond initial estimates."

Right now, he said, "there is no end in sight, and we are experiencing multiple waves of this dreaded disease. In the current situation, retail has been one of the most acutely hit sectors."

The report further said 71 per cent of respondents were "considering cancelling or deferring orders due to reduced festive forecasts due to the reduction in the festive season forecasts".

"This reduction in forecast puts back the pressure on the entire supply chain, including the suppliers, vendors, manufacturers and other ancillaries. Given a large portion of the workforce depends on daily wagers, more than any other indicator, this is the most significant indicator of the overall impact on employment and the economy," the report added.

It further said 61 per cent of the retailers were worried about inventory and wages as retail, as an industry, is capital intensive and working capital management is always one of the top priorities in the business.

Due to the lockdown and subsequent economic pressures, most of the businesses are trying to gauge their capital requirements for the next quarter at least. Nearly 60 per cent of the retail sector companies are actively looking for capital infusion, it added.

In terms of marketing spends, 77 per cent indicated a shift towards consumer loyalty, promotions and discounts.

"Change in consumer behaviour has led to a renewed focus towards engaging consumers online and revamp the consumer loyalty programmes ground up," the report said.