Grocery chains recover from Covid shock

Kolkata | Mumbai: Modern retailers and supermarket chains such as Reliance, DMart, Spencer's Retail, Nature's Basket and Big Bazaar have seen sharp recovery in their food and grocery business in the last two months after a sharp decline in sales since Covid-led lockdown in March.These retailers reached pre-Covid level of business during the festive period with consumers opting to cook their festive meals at home, leading to bulk purchases, and also buying gift packs of grocery items, three senior industry executives said.As per a report by Fitch Group’s India Ratings & Research, food and grocery retailers saw “meaningful recoveries” in October and November with many breaking even as compared to pre-Covid levels and most retailers had over 90% of their stores operational heading into the quarter. This is as compared to 70% store openings at the start of the September quarter.Spencer’s Retail and Nature’s Basket managing director Devendra Chawla said grocery part of the business during the festive period reached pre-Covid level of sales, and average bill value was up by 15-20% as compared to last year. 79599939In fact, the RP Sanjiv Goenka Group’s gourmet retail chain Nature's Basket turned EBITDA positive last quarter, just a year after acquiring the loss-making arm from Godrej Group.“It's sales per square feet at about ₹42,000 is now the highest in India across food and grocery retail formats, clearly indicating a turnaround,” Chawla said.Fitch expects overall sales for food and grocery retailers in the October-December quarter to be more than that of the pre-Covid levels. The research firm, however, said the full-year revenue could decline 5-10% due to initial Covid-led business disruptions and general economic slowdown.During the April-June quarter, most food and grocery retailers had shut nearly half their stores or operated them at restricted hours and consumers, too, shifted to online and local grocers due to lockdown. Their business fell by 11% as compared to last year, as per Fitch. However, the researcher said revenue recovered to over 95% in the July-September quarter.Neville Noronha, managing director at Avenue Supermarts that runs DMart, said any trend will become clear this month, based on like-for-like sales compared with December last year. “With the larger festival period behind us, December will be a good month to make a reasonably accurate assessment of where we stand on consumption across categories,” he said.Most brick and mortar retailers have strengthened their online platform after consumers gradually shifted away to the click-from-home model during lockdown restrictions, which also saw players shuttering their stores in containment zones or malls.As per market researcher Nielsen, the value contribution of large stores has come down this year to overall FMCG sales. The value contribution of modern retail to overall FMCG sales fell from 10.4% in January-March quarter to 8.2% in July-September period. In contrast, the share of traditional trade went up by 1.6 percentage points to 88.7% and ecommerce from 2.6% to 3.1% during the same period.

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