Lockdown: Disruption in production, supply lines to hit consumer business despite rise in demand, says report
New Delhi: Though demand and consumption of FMCG and household products have "increased massively" after the lockdown came into force in India, there is a "considerable slowdown in growth" of the sector due to disruptions in the manufacturing and supply chain, said a report.
The impact of COVID-19 is also "expected to be felt acutely" in the consumer durables sector as it has a high dependency on China for imports and there could be price hikes, according to the report from consulting firm Deloitte.
The consumer durables segment, which was already having a difficult time, is now expected to take close to a year to show any signs of growth, it added.
According to the report, FMCG companies are facing disruptions across manufacturing and supply chain, and there is a considerable slowdown in growth of these segments.
Moreover, disruption in supply chain and logistics is leading to drying up of inventory levels at retailers, which may significantly impact the supply of products to consumers, it added.
"The high probability of the virus spreading in India could result in a massive impact on the consumer products and retail sectors. The consumers are likely to curtail their discretionary spending which would significantly impact the sector's growth further," it said.
However, it also said that "if the supply and logistics disruptions are minimised, a quick recovery in categories such as food and beverage and FMCG products can be expected post the situation concludes."
The tourism and hospitality segment is taking a big hit and layoffs "seem inevitable in the restaurant sector as cash flows have dried up almost completely," said the report titled 'Impact of COVID-19 on consumer business in India'.
Consumer durables and appliances segment, which is dependent on supply of components, mainly from China, would also be impacted.
"Players may have already stocked inventory, so the impact is likely to be felt only towards the end of Q4 FY20," it said, adding, "Product prices could see an increase soon."
"The situation is extremely unpredictable with respect to this sector and is expected to take close to a year to show any signs of growth," it said.
India is presently going through an unprecedented complete lockdown of three weeks, scheduled to end on 14 April, to prevent the spread of the virus.
According to the latest report from the Union health ministry, the total number of COVID-19 cases climbed over 1,637, after 376 new cases were recorded in the last 24 hours, while the death count rose to 38.
Updated Date: Apr 02, 2020 11:23:31 IST
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