Present Tense, Fu­ture ???

IT Sales down by >60% since 8/11

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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

Anushrutis@cy­ber­me­dia.co.in

Ankitp@cy­ber­me­dia.co.in

Am­chi Mum­bai Lam­ing­ton Road is fa­mous for its whole­sale and re­tail

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