A Dull Christmas! Retailers Face the Brunt of Modi’s Demonetization

A Dull Christmas! Retailers Face the Brunt of Modi’s Demonetization

Mangaluru: It doesn’t look like Christmas that it used to be a year or years ago. There is no charm nor any excitement seen among people. And for retailers, shop owners and other business people demonetization has dampened Christmas sale. Demonetization has made Christmas celebrations low-key, and retail trade and business was simply dull during the festive boom. You know it is Christmas season in Mangaluru when the glowing star is outside homes. When twinkling lights are strung everywhere, when the brightly lit Christmas tree sets your spirit soaring and when jolly Santa beams at you from every second shop window.

Everybody watches out for the welcoming signs of Christmas and not the least retailers and store owners. For them, Christmas is serious business. Sales of confectionery, victuals, Christmas decorations, garments, toys along with big-ticket items such as jewelry, furniture, household goods, consumer durables, automobiles, liquor and high-end food boom during Christmas. All in all, it is the season for a sudden increase in revenues and for handsome profits by trade.

In fact, check with industry reveals that the festival’s warm glow is universal. It spreads across a cross-section of goods and services with all income groups contributing to the higher demand. Consumers are easily inclined towards splurging and there is a spike witnessed in impulsive purchases. Moneyed residents go to Dubai to shop while upper-middle-class shop at the big malls or travel to nearby big cities. And locally, the busy Hanpankatta business centre also sees some big bang, affordable shopping by the average resident.

Meanwhile in Mangaluru, demonetization and the cashless economy has become bugbears of celebrations this year. It has made shoppers frugal as they are faced with the liquidity crunch. People have cut down on expenditure to protect themselves from the problem of ‘no change’ and against rumors of further hardships ahead. Small traders and unorganized retailing have felt the pinch of demonetization as much as the malls, department stores and e-tailers. Between the different segments, it is a race to say who is affected the most although in terms of value it is obviously large retail that has taken a bigger hit.

According to retailers, demonetization has had an adverse impact on shopping because people are used to dealing in cash and are disturbed by the scarcity of currency in their purse. Salary earners are being paid in cheques and standing in the queue for hours to encash the cheque is frustrating. Further, the government’s alternative of the cashless mode of payment has not been accepted by all. First-time bank account holders are unaware about the utility of debit cards while even experienced card holders are unwilling to go cashless always. Also, there are a shortage of mobile point-of-sale (MPOS) machines among shopkeepers which implies that cash is unavoidable for shopping. Residents who have newly acquired debit cards cannot get used to the new system either. They have difficulty remembering the pin and feel it is better to push back purchases to an easier period.

Team Mangalorean made a quick round-up of stores around the city to reveal how much demonetization has affected Christmas shopping. The popular one-stop shop for all the wide array of Christmas and religious items, Jerosa Company-Hampankatta, owner Ullhas Rasquinha said, “During this time of the year my store is stormed with customers, but not this year, where I have taken a hit of about 30 percent in business. Peoples expenditure is down by 50 per cent this year, I guess demonetization has affected festival shopping significantly. People do not want to spend money. They have to save cash for priority and essential goods. Residents are not spending even though they have money in the bank because of the long queue for withdrawals.” Decorations are an integral part of the friendly Christmas tree and it is a once in a year purchase. Ullhas says that he does not foresee demand drying it up completely. “But quantity will be down,” he predicts.

A new Christmas store on KS Rao road is a riot of beautiful Christmas trees, baubles, gift items and a variety of articles, but Shyam, the store Manager says that footfalls of customers are less. “Market appears gloomy and missing the Christmas charm,” he says. In his opinion, “The government’s demonetization move is good but the move towards cashless economy is constrained by the absence of basic infrastructure, viz. mobile towers.” To overcome dull sales we have operated on thin profit margin and tried our best to make the customer happy, added Shyam.

Pastry shops and confectioners witness an explosion in sales during Yuletide. Stores are stocked with the best of goodies to lure buyers. Bryan Vas, proprietor of Vas and Sons Bakery-Bendore said “Christmas sales are not as per expectations. We knew that demonetization will surely hit the sales, so we didn’t stock many Christmas goodies. Not to mention that the sales were bad, but it was okay compared to all the past years. Seems like people don’t want to spend money like they used to in the past”.

Precious jewelry is what residents indulge in during Christmas. However, this time because of the overall ambiance of frugality residents are keeping away from jewelry purchases. Gold shops are reporting a drastic loss in income and have changed the display to light weight ornaments, according to a salesman at Jos Allukas. Demonetization is having a negative impact on the sale of gold, realty, automobile, smartphone and consumer durables. It has also affected online sales. And to boost purchases shop owners are offering attractive discounts, freebies and friendly sales service.

Peter Nirmal-General Manager of Hotel Taj Gateway said, “Christmas business is low compared to last year and earlier years. We have not got many bookings from travelers coming down from the North part of India like we used to get earlier. Presently we are seeing more NRI’s who have come down for the holidays and staying at our hotel. I think demonetization has some impact on the slow business right now. Hope the sales will get better in the coming days, but as of now we have already faced the brunt of demonetization”.

Experts point out that the seasonal spurt in business witnessed during Christmas is important for the retail industry as it is the peak time of the busy season. “The previous big festival of Diwali was lackluster and players were hoping for the tide to turn,” said a garment shop owner at City Centre Mall. Currently, the biggest concern is whether the situation will improve at the year-end or even three months down the line. The prognosis on the market turning buoyant is pessimistic and industry is sure that they will have to cope with the catastrophic impact of demonetization for many more months.