Present Tense, Future ???
IT Sales down by >60% since 8/11
IT Sales down by >60% since 8/11
India is a cash intensive economy, and after Modi’s surgical strike on black money i.e. demonetization, economy has disturbed from its usual current. Not only the common people lives have been changed albeit short term but impacted retailing sector a lot.
Retail sector in India is largely affected due to this decision. Markets are lacking of customers however, if we talk about IT retailers they are coping up slowly and steadily, even if opposition parties are ganging up to politicize this issue.
The government’s new currency policy against the black money has been termed game changer and the channel business is getting impact. Even though, the sellers are allowed to accept higher denomination currencies till the end of this financial year, there is a restriction among the customer mindset. The director of consumer and SMB division of leading laptop brand feels that maximum of the laptop and other IT products purchase happen only through physical cash transaction with larger denominations. With the new withdrawal limits, it is very obvious the laptop purchases are likely to hit. The hit is expected to be for close to 90 days when financial flow turns normal as earlier. The money which is within the customers might not be utilized for purchasing an IT product which might not come under the necessity. Payment through cheque is till now the most-proffered transaction of the Indian channel industry. With no restriction on the non-cash payments, the IT channel fraternity serving the enterprise segments is to remain normal.
AFTER EFFECTS IN NORTH
Nehru Place, a large commercial, financial, and business center in Delhi, India. Nehru Place is a widely considered to be a major information technology hub of South Asia. Coming back to the IT retail market in Nehru Place, there are 20 Thousand offices in 102 buildings where approximately 2-3 Lakh footfalls can be record every day.
Demonetization has drastically affected the largest IT hub of India. Retailers has witnessed 60-70% drop down in business which is very critical for the IT market in retail sector. As per the reactions taken by
DQ Channels from Nehru Place, retailers are not getting business after November 8.
Mahinder Agarwal, Director Broadcom Computers said, “After the demonetization came into the effect, people are busy in their basics. People are fulfilling their first priority. Our customers are in the Bank queues or in ATM line to exchange and withdraw their some cash from their hard earned money which is around just Rs.4000. So customers are not at all interested in spending the money in other way. All are busy in their basics right now.”
Speaking more on the situation, Mahinder Agarwal added, “In Nehru Place, retailers are sitting with no business as our footfall has been dip down upto 80% and that is a serious issue to us to run our business in one of the high rated bushiness centre line Nehru Place. Also whatever small business that we are getting is with debit or credit card. So we are not getting hard cash in hand for the business which is required hard cash for daily expenses.”
Talking about the future expectation and hope, Swarn Singh, Lotus Computers said, “Right now the current situation is bad in IT retail in
“After the demonetization came into the effect, people are busy in their basics. People are fulfilling their first priority. Our customers are in the Bank queues or in ATM line to exchange and withdraw their some cash from their hard earned money which is around just Rs.4000. So customers are not at all interested in spending the money in other way. All are busy in their basics right now.”
Mahinder Agarwal, Director Broadcom Computers
Delhi. We welcome the initiative of Government against the black money but the small businessman has harassed because mostly we do cash transactions. We are hoping the situation will come back normal by January when the cash flow in the market will be good and then customers at counter will return back.”
It has been seen that the consumers switching towards online stores to purchase their needs. Commenting on the same Swarn Singh added, “Most of the online platform companies deals in cash on delivery and people don’t have cash in hand. So online is not our major issue. Recently it has been seen in some reports that online shopping business has been drop down after this demonetization. We are hoping this situation will be in control soon and Nehru Place will get its old days soon”.
FOOT FALL IN WEST
market in electronics goods. Shops on the street sell computer goods, electronic items, television equipment, and wireless equipment at rates much lower than the maximum retail price as they have a high turnover. Turnover? Means, are we serious that what turnover Mumbai’s IT hub gets in normal still retail market is getting?
Situation with the entire retail market in the country is same. Every retail market in country has got affected after the November 8. The same situation has been seen with Lamington Road IT market. Retail market has been drop down by 50-60% after the demonetization initiative by Government of India. The negative impact of this initiative can be noticed around the IT market.
Bimal Jhaveri, Hardtrac Computers said, “As we talk about the long term impact, the initiative can be good, but the as a businessman, we are having our difficult time for our businesses. IT market has been reduced upto 50 to 60%. Today, a common people are busy in standing in queues to collect their new cash to fulfill their basics.”
“As we talk about the long term impact, the initiative can be good, but the as a businessman, we are having our difficult time for our businesses. IT market has been reduced upto 50 to 60%. Today, a common people are busy in standing in queues to collect their new cash to fulfill their basics.”
Bimal Jhaveri, Hardtrac Computers
“I also want to share some hard facts that if we talk about the retail market, Retails is basically caters for B and C tier cities where people believes in cash transactions instead of online transactions because of lack of knowledge. People still hesitate for online transaction because of many reasons and security is one of them. So currently the situation is drastic because of the lack of cash flow in the market,” he added.
Pravin Dhokha, Ortem Computers, Mumbai said, “Market and sales has been drastically went down in retail counter. First few days after the demonetization were difficult of the cash flow. 50% to 70% business at lamington road IT market has been went down. People as well as IT market is suffering these days no matter what will be the impact of demonetization positive or negative. But talking about the current situation, we are affecting and it is impacting us all”.
RETAILERS DRIVING DIGITAL CARD
Due to liquidity crunch in the market, the money supply graph has steep fall, which has affected business badly. On the other hand, retailers are doing best to maintain market. Kolkata partner Rajesh Saboo of Saboo Computers says “Our business has dropped 85 percent however, it is on short term basis, but on contrary it will benefit us longterm. Right now people are in panic stage, may be we can see the results in after two quarters, as digitization will increase, people will be buying more gadgets in turn it will benefit retailers.”
“After demonetization we are also encouraging consumers to pay via online platforms to curb this situation. Earlier we used to charge on credit cards payments but now we have waived off.” he added.
K L Lalani of Lalani infotech “We are running at huge loss, sharp footfall in sales is recorded, initially after government step, it was steep 80 percent drop in sales, now its recovering in slow pace. One interesting point is that, before demonetization, our sales ratio for electronic transfer was 25 percent, while cash sale was 75 percent. Now the ratio has been reversed, 75 percent is card and electronic payment rather than cash sales. Through out year, we provide zero finance, EMIs and credits to our consumers. As you know, people in India will never change their habit of buying from retail, so we are hoping that in 6-8 months things will improve and market will do better.
Vinay Dugar of Supreme Computers says “After demonetization, government has restricted cash flow in many ways. Because of this limitation, cash was not available even for exchange and there was not surplus money even for the common people. Amount which is approximately around 6-8 lakh crore rupees going back into the bank, obviously liquidity has been sucked up. This has created a huge crunch in lives of people. So, we are trying to make up for essential things first, rather than immediate purchases for any kind of consumer products.”
He then added, “There has been a footfall and sales are unexpectedly down by 60-70 percent. To curb this effect we have tied up with many digital platforms, like paytm, e- wallets, etc. Also we are offering and promoting cashless offers like, consumers don’t have to give down payments.”
Asif Khan, CEO, Technocrat Infotech said “Earlier, demonetization cash was major payment mode but now, we are asking our customers to pay via online payment platforms, like debit, credit cards, paytm etc. We are not giving consumers special discounts, however we are giving them facility of Zero finance purchase.”
On market environment he concluded “Situation is worst, customers are not coming to market, there is no improvement in sales too. Political parties are also making ruckus on this issue. And in my opinion, this is not a short term effect, it will take an ample amount of time to normalize the situation of the retail sector.”
CONSUMERS ARE LESS INTO ONLINE
Jharkhand has a different story altogether, here sales are dropped down, but first people are first looking at fulfilling there essential needs.
A S Vidyarthy of Origin Technology, Jamshedpur says, “Demonetization has affected our business a lot, retail market has degraded 40 to 50 percent. Overall, a huge difference is seeing in sales. In Jharkhand, people are not so into online. And after demonetization, retail is in huge loss and underperforming.”
Owner of Computer Network in Ranchi, Sanjay K Jain from also shares same views, “IT and Telecom trade sales has degraded a lot, as it is not an essential item. My business has 60 percent dropdown in sales. Consumers are right now, looking at essential things to buy.”
DEMONETIZATION HIT SOUTH
The Telangana government have decided to study the impact of demonetisation of high currency notes on its revenue on a daily basis.
Nagendran, CEO, GBS Computers, one of the leading retailers in the country, said, “As immediately the government announced the new currency policy, there was a drop of 60% in the market. Our customers’ mindset was not to have any purchases till there are some relaxations. However, after a couple of weeks, we see some 20% increase in the business in last week. So, on an average, I would say the drop was around 50%.”
Bloom computers, another leading channel partner from Tamil Nadu
“One interesting point is that, before demonetization, our sales ratio for electronic transfer was 25 percent, while cash sale was 75 percent. Now the ratio has been reversed, 75 percent is card and electronic payment rather than cash sales.”
K L Lalani Lalani infotech “Demonetization has affected our business a lot, retail market has degraded 40 to 50 percent. Overall, a huge difference is seeing in sales. In Jharkhand, people are not so into online. And after demonetization, retail is in huge loss and underperforming.”
A S Vidyarthy Origin Technology, Jamshedpur
feels that the impact is such that business is dropped close to 70%. Whatever business has happened till date was only through the e-payments and plastic money. The customer sentiment is negative which makes the entire business scenario dull. Speaking on the distribution front, Karthikeyan said he got feedback from many small retailers are not willing to make any billing as they think that customers might not bill.
B Kuberan, CEO, VBK IT mall, one of the leading IT retailer in Trichy says that there was no impact for the first three days. However, later the business was dull. Kuberan also feels that the business sentiments are always dull between Post-Diwali and pre-New Year. One segment which, according to him, did not get disturbed was the printers and copiers segment which is not making phenomenal growth but steady compared to other laptop and PC.
The market was down by 80 percent in Kerala in the initial days of announcement. However, we found the market getting recovered, thanks to the freeflow of INR 2 thousands. Kerala is digital savvy market and we have considerable digital payments. Says Ram Aggarwal, CEO, Pooja Tech.
“There was no impact for the first three days. However, later the business was dull. Kuberan also feels that the business sentiments are always dull between Post-Diwali and preNew Year. One segment which, according to him, did not get disturbed was the printers and copiers segment which is not making phenomenal growth but steady compared to other laptop and PC.”
B Kuberan, CEO, VBK IT mall
Amchi Mumbai Lamington Road is famous for its wholesale and retail