WE can now add the shift in economic activity to virtual markets and small towns in the high spending season of Eid to our list of the after-effects of the pandemic.
Franticly adjusting businesses to the vagaries of such times has left the big players too overwhelmed to narrate details of the strain of losing their share of the Eid economy to counterparts they hitherto did not consider competition. Market watchers and business leaders shared anecdotal evidence suggesting a remarkable upset.
Factors like uncertainty, fear, clipped family income, limited time and SOP-related tensions in markets altered the Eid market beyond recognition. The plane crash close to the holy festival further demoralised the last-minute shoppers.
The information shared by people active in the market circles reveals that business in northern Pakistan fared better than in the southern region. Grocers, bakers and goods transporters did well, but the businesses of hotels, restaurants, caterers, groomers and saloon operators, passenger transport services, particularly ride-hailing services, textiles, footwear, accessories, cosmetics, artificial jewellery, furniture, sweets outlets, electronics, drapers and toys made a fraction of their usual earnings. The situation was so bad that many may never re-emerge from the shock.
Uncertainty, fear and clipped family income altered the Eid market beyond recognition
“Besides the higher prosperity level across Punjab compared to the rest of the country, the lack of seriousness towards the Covid-19 threat by Chief Minister Usman Buzdar’s team must have contributed to the disparity in sales volumes between the north and south on Eid,” said an expert.
He did not spare the PPP government for the sorry picture emerging in the dissection of the Eid economy. The behaviour of Lahore and Islamabad matters in the making of the Punjab scenario, but if you take Karachi out of the equation, there is not much left in Sindh in terms of commercial activity.
“Chief Minister Murad Ali Shah deserves a pat on the back for a more astute response to the pandemic, but that does not absolve him and his party, ruling the province since 2008, of the blame for a lack of progress in Sindh outside Karachi. The megacity counter-balances Punjab to some extent. However, if activity slumps here, economic data for the whole province crashes, depicting Sindh decades behind Punjab,” he remarked.
When asked to identify top gainers, almost everyone contacted agreed that grocers and retailers of essential items did a roaring business this year, followed by semi-cooked and processed food companies with online presence. The major fast-food brands with their own delivery mechanisms almost swallowed others. They are said to have achieved as high as up to 85 per cent of last year’s Eid sales.
“Demand on the Eid day peaked to a level for the top few fresh-food brands where customers had to be turned away because of capacity limitations,” an insider working for a fast-food brand told Dawn in confidence.
“The smart companies with established online presence and sound delivery arrangements were rewarded by the moneyed millennial. No wonder that online sales of upscale brands in clothing, accessories and personal care doubled and tripled from last year. The gain was still too miniscule to compensate for the loss as online continues to represent a tiny share in the business generated at walk-in stores. The old-fashioned ladies of spending classes who are assumed to be the key drivers of the Eid market upswing prefer real shopping to virtual shopping,” observed another marketer.
People with meagre means — particularly those residing in second-tier cities in Punjab who wait the whole year to shop at Eid — did manage to make purchases that they considered necessary. It translated to reasonably fair business for retailers there.
“The two-month suspension in production and the timely arrival of imported items stuck in containers at the port posed a bigger challenge. The supply situation empowered retailers to control the market and stretch margins,” Naeem Mir, general secretary of the All Pakistan Anjuman-e- Tajiran told Dawn over the phone from Lahore. He was critical of the provincial establishment that failed to intervene to shield consumers from excesses.
Muhammad Haroon Agar, former president of the Karachi Chamber of Commerce and Industry and Pakistan Chemical and Dyes Association, felt all businesses except grocers and goods transporters suffered setbacks this Eid. He mentioned a footwear chain owner with 26 outlets all over Pakistan who is paying rent from his pocket for the last three months as his sales dipped to barely 15pc of the normal. He said a men’s wear dealer who sold up to 40,000 suits last year sold hardly 1,000 kurta suits in Karachi this year.
“There are many friends exploring the option of filing for bankruptcy. I have never seen a situation like this ever,” he said.
“Covid-19 dramatically altered the composition of the Eid economy in Pakistan. Transport, grooming services and restaurants took the greatest hit followed by textiles and footwear. Big brands like Careem, Airlift, Swvl, Khaadi, Alkaram, Gul Ahmed, Marriott, Pearl Continental etc may take years to recover from the dent to their business this year,” a young marketing professional commented.
A random survey some years back revealed the broad composition of the Eid economy. It projected the share of food and beverages at 45pc, followed by clothing at 40pc. The rest of the 15pc Eid economy is shared by footwear, accessories, cosmetics, grooming, tailoring and transport.
Majyd Aziz, former president of the Employers’ Federation of Pakistan, thought that the government lost to the coronavirus in terms of the dent to economic activity in a big way when the situation was already weak. “The real loser is industry that had to suspend production because of the government’s decision to allow operations of only the essential services, including the retail sector.”
Published in Dawn, The Business and Finance Weekly, June 1st, 2020