NEW DELHI | MUMBAI | KOLKATA | BENGALURU: Consumer goods manufacturers are bracing for a substantial hit to sales in the next six months or so until Indians get to grips with the demonetisation of Rs 500 and Rs 1000 notes as well as curbs on daily cash withdrawals.White goods such as televisions, refrigerators and washing machines could slump as much as 70% as a good portion of the market is driven by cash, experts said.“This may continue for next five-six months till the dust settles down and there is adequate circulation of the new currencies,” said Panasonic India President Manish Sharma. Malls and restaurants are feeling the pinch as customers suddenly have less money in their pocket than they did until midnight on Tuesday, when Rs 500 and Rs 1,000 notes ceased to become legal tender as part of Prime Minister Narendra Modi’s efforts to root out black money and counterfeit notes. Food outlets reported a 40% decline in business, said Riyaaz Amlani, president of the National Restaurant Association of India.Malls across India reported a 10-15% drop in footfalls compared with the usual numbers on Wednesdays.Videocon Chief Operating Officer CM Singh said sales dropped on Wednesday across the country.“While EMI (equated monthly installment) schemes now account for almost 60% of purchases in urban India for premium appliances and televisions, the balance 40%, which is led by cash payments, will take a big hit,” he said. “We, however, hope it remains a temporary phase considering that the marriage season is just round the corner.”The move will add to the post-Diwali slump unless prospective buyers take to plastic or electronic forms of payment in bigger numbers. The Reserve Bank of India is launching new Rs 500 and Rs 2,000 notes but withdrawal limits will be in place.“Keeping in mind the supply of new notes, in the first few days, there will be a limit of Rs 10,000 per day and Rs 20,000 per week. This limit will be increased in the coming days,” Modi said in his announcement on Tuesday that left many Indians scrambling to turn their Rs 500 and Rs 1,000 notes into those of Rs 100. That can create too big a bulge in wallets though.“Our average ticket size is about Rs 5,000 so people may not be able to carry many bundles of cash in their purses,” said Vivek Bali, India chief executive of LVMH owned cosmetic company Sephora. “So there could be impact of 20-25% till it normalises in December.”Parle Products said its business could see a downturn over the next few days. “It will be a slightly panicky situation for one week and thereafter, things should settle down,” said Krishna Rao, deputy marketing manager at Parle Products, who added that the December quarter is generally a lean season.BUYING BIGSome buyers, however, managed to take advantage of the window of opportunity between the announcement on Tuesday night and the clock striking midnight to spend their Rs 500 and Rs 1,000 notes.“This was the scene at every organised shop. People were buying like crazy,” said Mehul Choksi, chairman of Gitanjali Group, which sells jewellery. “It was exactly like Dhanteras. What we sold on a full day on Dhanteras we sold in two hours.”Several cellphone retailers reported a surge and kept stores open till midnight. The demand was mostly for pricey smartphones. “Several consumers bought multiple handsets, the most in demand being the new iPhone 7 and 7 Plus followed by Samsung Galaxy S7 and S7 Edge. In fact, some customers even bought five-six handsets at one go and everything was in cash,” said the CEO of a leading cellphone retailer.After that surge, footfalls dropped on Wednesday. “We expect the shopping that used to take place using cash to go down significantly,” said Yogeshwar Sharma, executive director.Suresh Singaravelu, executive director of retail, Prestige Estates Projects, which operates the Forum malls in south India and Bengaluru’s luxury UB City mall, echoed this.“For the next three months, there will be a minimum 20% reduction in fashion consumption because of the current sentiment of fear of the unknown among consumers,” he said. “The eating out market will also get tough with about 12% dip for the same duration.”An All India Mobile Retailers Association spokesperson said the sale of smartphones priced upwards of Rs 25,000 dwindled sharply on Wednesday. “Around 40% of the purchases in this segment is driven by cash whereby this category will take a take a hit,” he said.In order to soften the blow of demonetisation, telecom operator Vodafone extended the due date for paying bills by three days. Rival Airtel also made similar arrangements. “We are extending bill payment due date for postpaid customers by up to 3 days and will provide some talk time/data loan to prepaid customers to ensure there is continuity of services and they are not inconvenienced,” said an Airtel spokesperson.Pushpa Bector, executive vice-president and head, DLF Retail Malls, which operates Mall of India in Noida and Promenade Mall in Delhi’s Vasant Kunj, expects business to drop for a while. “The decision will definitely have an impact on the retail sector as the number of transactions executed in cash is high compared to plastic money. However, this will be a shortterm impact,” she said.‘BLESSING IN DISGUISE’However, Kishore Biyani, chief executive of Future Group that operates a host of chains including Big Bazaar and Central malls, said the scrapping of higher denomination notes will be a blessing in disguise for organised retailers in the short and medium term.“Now that people won’t have the cash so they won’t be going to the neighbourhood stores and the thelawalas to buy,” he said. “So they will come to the modern stores where they can pay by any medium.In a sense we are at an advantageous position right now.”Rajneesh Mahajan, executive director of Inorbit Mall in Mumbai, agreed with Biyani and said the coming months could encourage consumers to use their debit and credit cards.“In future, yes there might be a change in buying behaviour. People may move to using credit cards or debit cards. I do see bigger ticket items like watches, jewellery and electronics may see some impact in the short run.”Several consumer companies and retailers, however, said the measure will benefit them in the long run. “There could be some short-term inconveniences and disruption for us with respect to liquidity in the retail and wholesale trade, but in my opinion that is something which can be coped with,” Saugata Gupta, managing director of Marico Ltd. “Additionally, in the medium term, reduction of cash transactions in the distribution system will actually benefit the organised players.”