Apple offers exclusive brand stores financial support; cos like HUL and ITC extend payment term

KOLKATA | MUMBAI: Apple has paid its 500-odd exclusive stores in India to cover two months of their rent and salaries for store staff, apart from providing additional credit period of 60 days to help them tide over business disruptions due to Covid-19.

Others like Hindustan Unilever Ltd, ITC, Samsung, Marico and Godrej Consumer Products are also extending payment periods and other support to their trade partners and retailers.

Most retailers are grappling with low or intermittent sales in FMCG and no business in categories like mobile phones and consumer electronics, but are burdened with high overheads such as employee wages.

Apple has already transferred the “financial support”, as it refers in the email sent to retailers, amount to all its Apple Premium Reseller partners who run the large-format stores and Apple Retail outlets which are smaller exclusive outlets.

The company has asked partners in the email to “explore and improve alternative channels to distribute Apple products, including online.” Apple has offered multi-brand retail stores an additional payment period of 30 days. The company did not respond to an email seeking comment.

Several large and small retailers have approached brands for support, as the lockdown that started on March 25 has crippled their business. Even food and grocery retail chains that are operational have sought help since their sales are lower than usual, with several stores remaining shut and others facing disruption in supplies.

The country’s largest FMCG firm, HUL, said the lockdown was impacting the cash flows of both suppliers and distributors. HUL is paying suppliers on time and is evaluating the needs of distributors and supporting them with extended credit to ensure continuity of operations, its spokesperson said.

Industry executives said electronic brand Samsung was planning a payment term extension policy. The company did not respond to ET’s request for comment.

Smartphone brand Realme India said it had extended the credit terms for trade partners and a few retailers including large chains for 21 days, and would review it further with the lockdown getting extended.

A senior executive of a large retail chain said the top 20 FMCG brands had extended the usual payment term of 15-25 days by an additional 5-15 days.

Marico managing director Saugata Gupta said companies had to support each other and even vendors who were mostly MSMEs.

Godrej Consumer Products CEO (India) Sunil Kataria said the company had provided a week’s credit extension to channel partners.

“This in turn helps retailers who are facing a severe shortage in sales of non-essential items and a difficulty in accessing banks given the current restrictions. We are offering a special daily allowance to merchandisers and distributor salesmen for their efforts,” he said.

Retailers said support from brands are required to remain afloat with the Covid-19 lockdown severely impacting their balance sheets with no relaxation yet on fixed costs like rent and salaries with zero or minimal sales.

East and North’s leading electronics chain Great Eastern Retail director Pulkit Baid said these are extraordinary times and requires brands to support dealers who are in severe cash flow imbalance.

“Consumer durables, smartphones and IT brands must take cue from auto and FMCG categories and work on a more pragmatic credit policy to felicitate trade post lock down,” he said.

Mobile retailers body, All India Mobile Retailers Association (AIMRA) has written to all smartphone brands to offer 30 days of credit to retailers on all invoices that are due. AIMRA expects post lockdown, business will take at least 3-6 months to revive.

The body has also requested the brands to give 2% extra margin for three months to help retailers bounce back which would help to pay rentals, salaries, interest, EMIs and household expenses “as the earnings would drastically fall due to slow pick up of sales in coming months.”

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