consumer markets in post covid india advisors-covid impact on consumer sector… · 7.2% 6.8% 5.0%...
TRANSCRIPT
Consumer Markets in Post COVID India
April 24th, 2020
2
Contents
• COVID Battered GDP Projections for India
• Impact of COVID-19 on Demand Side
• 3 Lockdown Scenarios and their Impact
• Sector Wise Impact Analysis
1. Apparel
2. Footwear
3. Consumer Durables and Electronics
4. Two Wheelers
5. Cars
3
7.2%6.8%
5.0%
1.9%
1.0%
3%
1.5%
4.0%
2017 2018 2019
COVID battered GDP projections for India
Projections for FY2021
IMF
World Bank
ING Think Base Case Worst Case Best Case
The Indian economy has been facing a situation of slowdown from the last few quarters of the FY20 fiscal year.
In the third quarter of the last fiscal, the economy grew at a six-year low rate of 4.7%.
There was a strong hope of recovery in the last quarter of the current fiscal. However, the new coronavirus epidemic has made the recovery extremely difficult in the near to medium term.
The outbreak has presented fresh challenges for the Indian economy now, causing severe disruptive impact on both demand and supply side elements which has the potential to derail India’s growth story.
Data Source: World Bank, IMF, ING Think
FY18 FY19 FY20
4
Impact of COVID-19 on demand side
Around 37% of salaried employees in urban India are informal workers, who will be impacted by uncertain wages during this pandemic.
Consumption is getting impacted due to job losses and decline in income levels of people particularly for corporate mid level staff and the daily wage earners.
With widespread fear and panic now increasing among people, overall confidence level of consumers has dropped significantly, leading to postponement of their purchasing decisions.
The impact can be even more severe if domestic supply chain disruption puts negative pressure on availability of essential commodities as the lockdown extends.
Data Source: Ministry of Statistics and Programme Implementation (MOSPI), 31 January 2020
Private consumption expenditure % share
Food 26.3%
Transport 17.6%
Housing and Electricity 13.7%
Clothing and Footwear 5.8%
Health 4.5%
Education 4%
Furnishings and Household equipment 3.2%
Communication 2.7%
Restaurants and Hotels 2.2%
Alcoholic beverages, tobacco and narcotics 1.9%
Recreation 0.8%
17.2%
Most impacted Markets
3 Lockdown Scenarios and their Impact
6
Market projections for the three probable scenarios keeping the impact of below mentioned factors on each segment:
• Duration of Lockdown
• Pace of Recovery of Market
• Demand Seasonality
LD40Scenario 1
Lockdown for 40 days till May 3rd
Jaan Bachi Lakho Paye(Happy to be alive)
Optimistic
LD70Scenario 2
Lockdown for 70 days tillMay 31st
Jaan Hai Jahan Hai(Thank God, am alive and have
a job)Realistic
LD100Scenario 3
Lockdown for 100 daystill June 30th
Jaan Nikal Gayi(Am as good as dead) Pessimistic
Expected Consumer Response to Lockdown
Expected Consumption Behaviorpost Lockdown
3 probable scenarios of duration of lockdown
7
Longer lockdown, slower recovery – a double whammy
40
70
100
30
45
75
0 20 40 60 80 100 120 140 160 180 200
LD40
LD70
LD100
(No. of days)
175 days
115 days
70 days
Lockdown period Recovery period
(to regain 60-70% of normal sales)
8
Recovery pace will vary across segments
High Low
Apparel Footwear CarsTwo wheelersConsumer Durables & Electronics
Pace of recovery
While all consumer market segments will be affected badly, it is expected that some will recover faster than the others depending on the following factors :
• Utility – required on a regular basis for basic needs
• Durability - need to replace due to wear and tear
• Unit Cost – could be a deterrent to spend large sums
9
Seasonality will have different impact across segments
Apparel
Footwear
Cars
Two wheelers
Consumer Durables & Electronics
Q1 - AMJ Q2 - JAS Q3 - OND Q4 - JFM
NormalHigh Low
(Sales Velocity during normal times)
(Q1-AMJ : April, May, June 2020and so on)
Apparel Market Scenarios Post Lockdown
11
Certain categories will take longer to recover
Casual wear
Loungewear
Formal wearEthnic Wear
Pace of recovery
Innerwear
High Low
Jeans Party, Evening & Occasion wear
Kids wear
12
76
58
49
38
1 2 3 4 51 2 3 4 5
Market can lose from 104,000 crs. (20%) to 255,000 crs. (48%)
Pre COVID-19 Projected Sales for FY21
Sales loss 104,000 crs. Sales loss
168,000 crs.Sales loss
255,000 crs.
(in Rs.)
LD 100LD 70LD 40
20% 31% 48%533,000 crs.
429,000 crs. 365,000 crs. 278,000 crs.
Footwear Market Scenarios Post Lockdown
14
Sports and Fitness Footwear
Dress Footwear
Pace of recovery
Casual Footwear
High Low
Different categories will recover at different pace
15
91
1 2 3 4 5
Sales loss23,000 crs.
Sales loss 36,000 crs.
272
Sales loss 49,000 crs.
Minimum sales loss of 23,000 crs. (26%) can rise to 49,000 crs. (54%)
LD 100LD 70LD 40
26% 39% 54%91,000 crs.
Pre COVID-19 Projected Sales for FY21
(in Rs.)
68,000 crs. 55,000 crs. 42,000 crs.
CD&E Market Scenarios Post Lockdown
17
CD & E pace of recovery across categories
Kitchen Appliances and White Goods
Mobile Brown GoodsLaptop
Pace of recovery
High Low
18
221
1 2 3 4 5
Depending on length of lockdown loss can go from 55,000 crs. (25%) to 116,000 crs. (52%)
(in Rs.)
LD 100LD 70LD 40
Sales loss 55,000 crs.
Sales loss 92,000 crs. Sales loss
116,000 crs.
25% 42% 52%221,000 crs.
Pre COVID-19 Projected Sales for FY21
166,000 crs. 129,000 crs. 105,000 crs.
Two Wheeler Market Scenarios Post Lockdown
20
106
1 2 3 4 5
Data Source: SIAM
Minimum 29,000 crs. (27%) of market will be lost and 58,000 crs. (55%) in worst case
(in Rs.)
LD 100LD 70LD 40
Sales loss29,000 crs. Sales loss
42,000 crs. Sales loss 58,000 crs.
27% 40% 55%106,000 crs.
Pre COVID-19 Projected Sales for FY21
77,000 crs. 64,000 crs. 48,000 crs.
Car Market Scenarios Post Lockdown
22
197
1 2 3 4 5
Data Source: SIAM
Cars market is expected to lose most amongst covered categories
(in Rs.)
LD 100LD 70LD 40
Sales loss 85,000 crs. Sales loss
108,000 crs.Sales loss
135,000 crs.
43% 55% 69%197,000 crs.
Pre COVID-19 Projected Sales for FY21
112,000 crs. 89,000 crs. 62,000 crs.
For detailed reports contact
Wazir Advisors Pvt. Ltd3rd Floor , Building #115, Market 44, Gurgaon - 122 002 Haryana- IndiaTel : +91 124 4590 300
Harminder SahniFounder and Managing Director
98100 66246
Pakhi SaxenaBusiness Director
99716 66404
Mohit JainBusiness Head
88601 50880