Yesterday, I made my periodic visit to the Delhi's wholesale and
popular retail markets to assess the current trends and mood of the markets. A visit
to markets at this point in time is important because this is the time when
most of the retailers build inventory for the coming festival & marriage
season which usually accounts for almost half of their annual sale.
Unlike, previous years, this time I was not expecting any
surprises; and I did get none. The mood of traders as well as buyers was
despondent. The following is the feedback from my rendezvous with traders in
Delhi.
(a) This year the trade is
marginally slower than the last year. However, many traders are expecting the
declining trend of past 3years to bottom out this season. Inventories have
reduced materially. Costs rationalization has been mostly achieved. GST has
been imbibed completely. Integration with
(b) The wholesale trade in
grocery items, especially spices &, pulses, is facing structural problems.
The volume of trade is rising, but the margins are compressing. The price
manipulation by hoarders and large importers has almost ended, so has the
volatility in prices. The wholesalers are now keeping much lower inventory and
learning to live with nominal trading margins.
The import of confectionary and dry fruits has been lower this
year, a second consecutive year of decline. The import of fresh fruits and
vegetables is higher as compared to the last year. The volumes are higher but
margins much lower.
The working capital finance by banks and NBFCs is much tighter
and expensive this year.
(c) The textile trade is
slow. The rural demand from J&K, Himachal, UP, MP, Chhattisgarh and Haryana
(the markets mostly served from Delhi wholesale trade) is down for second
consecutive year. Besides volumes, the prices are also lower this year.
(d) Packaging material
trade is also witnessing second consecutive year of contraction. The pricing is
stable.
(e) The festival related
demand of decorations, lighting, toys, gifts etc. is 15-20% lower as compared
to past two years. The pricing is however higher as compared to last year.
(f) Electrical hardware
and sanitaryware demand from retail segment is lower than last year (that was
not good in itself). However, wholesale demand from realty sector seems to have
picked up from last year.
(g) Bullion and Jewelry
traders are expecting the demand this season to be lower than last year and
appear to have liquidated some of their inventory to take advantage of high
bullion prices.
(h) Retail traders were
more despondent than the wholesalers. Although the buying season has not even
started and this is the leanest fortnight (Pitru Paksha or Shradh) of the year,
most retailers are expecting lower foot falls on their shops this year. The
wholesalers believe that this pessimism is without basis and retailers may be
positively surprised on demand side in next three months.
(i) The traditional
markets, where many more people visit and much more business is done as
compared to swanky malls in the southern parts of city, had scanty security
apparatus; whereas the mall areas had overwhelming presence of security
personnel. It is difficult to gauge what is primary objective of the security
management by government agencies.
My overall assessment is
that with little support from the government trade cycle can accelerate much
faster. The steps taken so far by the government are however inadequate and
mostly misdirected.
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