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May 27, 2020

Traders estimate 70pc Eid sales lost to corona aftermaths

Business

May 27, 2020

KARACHI: A traditionally Eid-related shopping spree was seen dying down under the exceptional coronavirus-based lockdown that even could not see shoppers comeback on its partial ease during the last few days ahead of the festival and 70 percent of sales were lost, traders said on Tuesday.

Various traders estimated that Eid season spending – that usually begins in the mid of Ramazan – fell to Rs7 to 8 billion compared to Rs35 billion last year. The lockdown significantly eroded the buying power of people, they said.

“Eid season shopping/spending this year was less than one-fourth if compared with the last year, as the continuous shutdown of businesses hit the peoples’ buying power,” said Mahmood Hamid, president of All Pakistan Organization of Small Traders and Cottage Industries Karachi. “Last year Eid season shopping was around Rs30 billion. Though there are no definite numbers this year, we estimate it at around Rs7 billion.

Hamid hastened to add: “People did visit the markets but they couldn’t spend much”.

Traders said when the markets were opened for the first time after lockdown since March 23, people rushed to buy things as they were out of supplies and goods.

But, the damage has already been done.

“Private companies had either slashed the salaries of their staff or didn’t pay at all, while daily wagers and small businessmen had gone bankrupt, thus denting their buying power capacity,” said Muhammad Bilal, a shopkeeper in Gulshan-e-Iqbal said. “People kept coming to our shops but they were unable to buy much. We mostly sold kids’ stuffs.”

Even after the Supreme Court ordered opening of malls and markets for seven days a week as Eid was just around the corner, the buyers’ response was seen quite lukewarm, traders said.

“The opening of markets and businesses resulted in little economic activity we had in last few days,” Hamid added.

Downturn in commercial and trade activity upended the economy’s vital small and medium enterprises sector – which contributes 40 percent to the country’s GDP, 25 percent in its export earnings, and 80 percent in non-agricultural employment.

The nascent ecommerce sector that was expecting its market share to increase in this stay-at-home time couldn’t generally attract the diverting sales.

Daraz.pk, recently acquired by Chinese ecommerce giant Alibaba, tried persuading small and medium businesses to harness this transformation as an opportunity to have online presence, but offline businesses generally showed reluctance to adopt alternative marketing channels.

The comments and stats from the online shops could not be made available despite several attempts.

All Karachi Tajir Ittehad Chairman Atiq Mir observed that people were buying online, but for a very limited number of brands and for a very limited product range.

“People only buy some household electronics, certain auto parts and garments online, but an established concept of e-commerce is far away,” said Mir.

Mir said Eid season spending was estimated at around Rs7-8 billion this year, while online sales constituted less than three percent of the volume.

“I believe it would take some 10 years for e-commerce to become just a thing in Pakistan, as it is in the world,” he added. “There are many problems in ecommerce here, and top of the list is lack of buyers’ trust.”

SBP’s annual report on the state of economy 2017/18 showed that sales of local and international e-commerce merchants grew 94 percent in 2018 to reach Rs40.1 billion. They were Rs20.7 billion in 2017. Post-paid cash-on-delivery transactions account for 60 percent of the total value of ecommerce in the country.