FMCG product costs may go up as supplies shrink

Neighbourhood kirana stores so far aided in steady supplies and keeping prices lower

By Author  |  Published: 11th May 2020  11:57 pm

Hyderabad: If the lockdown is fairly successful so far, the neighbourhood kirana stores have played a big role in that. They have constantly ensured that there is no shortage of essential commodities even as there has been no increase in the prices. But things can change in days to come as about 30 per cent of the retail players will find the going difficult due to financial reason, said Rajesh Sharma, Telangana president of industry body Confederation of All India Traders (CAIT) and also President of Telangana Consumer Products Distributors Association (TCPDA).

The State has about 10,000 FMCG dealers and they are the nodal points for the big FMCG companies to reach their products to the end consumers.

“During the Covid times, it is the small kirana stores that played a key role in ensuring success of the lockdown imposed. They turned coronawarriors and supplied the essential commodities. In some cases, they also delivered them at door steps. They also offered a lot of stock on credit in view of the curtailed or delayed salaries to many people,” said Sharma.

According to him, the kirana stores played a key role in keeping the prices unchanged.
“Situations like Covid were not used for profiteering, hoarding or creating artificial scarcity,” he said.

Once the lockdown was announced, it took a couple of days to figure out the key things to do. The retailers had stocks for about 15 days. The distributors had stocks that would last for similar number of days. The companies too had stocks that would last for 15 days. These ensured continuous supply to the retailers, he said.

However, things would start getting difficult from now due to multiple reasons. Companies are allowed to operate with limited staff members and this would hit the supply chain as well as manufacturing. Various raw materials required have to be sourced from multiple vendors, who are also facing the same problems. Availability of limited number of vehicles on the road is also factor that will increase the cost of production at the factory level and this has to be passed on to the endusers, said the industry body president.

Most of the traders used the conventional channels – phone, sms and whatsapp, to place orders. “Many kirana stores still do the business the old way. Placing orders through a portal are still far for many,” he said.

The retail sector contributes about 30 per cent of the total GST. “The retailers need some support from the Government. Instead of moratorium of three months on payments, a waiver of interest for the lockdown period will be good. Many retailer players have curtailed their operations in view of the lockdown guidelines. They are paying the salaries to the staff and so far have not cut any jobs,” he said.

“The logistics costs have increased as now we are required to pay two-way charges for transport. Earlier, we used to pay one way and the fleet owners would find other orders in the return direction. With fewer number of vehicles on the road, there is a greater demand for the vehicles,” said Sharma adding that the indirect employment is at least five-fold.

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