Economic Slowdown: Start-ups Failing, Markets Remain Sombre Ahead of Festive Season in UP

A deathly shadow hangs over markets and consumers in various parts of Uttar Pradesh. It is the shadow of the slowdown. Shop sales are down for a range of commodities—from biscuits and namkeen packets to jewellery and two wheelers. Restaurants and app based delivery systems are facing rising losses. The middle class—usually at the forefront of consumer spending—is sullen and is holding back on spending. 

Anshul Gupta, 25, a resident of Firozabad, who had launched a beverage startup in Lucknow two years ago, is now looking for people who can buy his startup, as he has not been able to make much profit from it.

Gupta, who has a professional degree in chemical engineering from a reputed institute in Gujarat, said that he quit his well-paying job after getting impressed by Prime Minister Narenadra Modi’s speech. But the start-up failed to attract investors.

“I was not happy with the regular 10 to 5 job I was doing in Jamnagar. I wanted to do something of my own and I then started this first beverage startup in Lucknow along with one of my friends, but he walked away after a few days. Since past two years, I am running this business alone,” says Gupta, adding that about six-seven months ago, he was able to earn some profit, but not sufficient.

“The entry of food delivery companies like Swiggy, Zomato and others helped us in picking the business, but it worked only when we provided good offers to the consumers. The beverage industry (when it comes to soft drinks) is dead and can only be revived only with the intervention of the government. Pumping in some good remedies is required to bring the economy on track,” says the young entrepreneur.

Ashish Puri, a chef by profession, who has an expertise in setting up restaurants and chalking out business plans for them, says that majority of premium eateries running in tier II and III cities are either facing losses or their owners are searching for eligible buyers.

“There is loss everywhere. Not even a single premium eatery is making profit and I can say this withe confidence. I have been looking after the maintenance of the commercial kitchens in almost all the big restaurants and I talk to their owners. From the conversations I have with them, I can say that the recession this time is also taking a toll on the food and beverages market. It was not so in the recessions that we had experienced earlier,” says Ashish.

Explaining the slump in the market further, he says, “Food apps [mobile applications], which give customers a good deal like 50% off on the entire bill have also failed to attract many customers. Some of the food delivery applications have reached a level where they are contemplating wrapping up their operations.”

“A few days ago, the DineOut application was rolled out, which offered great deals. Initially, many restaurants responded to it, but then they all unsubscribed, as it failed in bringing people to dine in at the hotels. Now, the situation has become so serious that only carts are able to earn a profit because people do not have money to spend on premium places,” says Puri.

Shivam Gupta, a renowned jeweller from the adjoining Barabanki district says that the festival of Navratri is about to begin, but the shops have not seen good business in this festive season. “Earlier we used to get orders worth several lakhs months ahead of the festive season, but with only two weeks left for the Navaratri, we have not received any good order. There is no money in the market and the ornament industry is going down with each passing day,” he says. He further adds that despite only a few auspicious marriage dates [as per the Hindu calendar] available this year, he has not received an order for any wedding yet in any of his four shops.

“Same is the case with the apparel stores. People are buying the regular stuff, but are not spending much on anything. Be it apparel or jewellery. With no money flowing in, we are scared for our survival in the market with such a cut throat competition,” says Shivam who also owns a big apparel store in Barabanki.

Tushar S, who is the regional sales manager of a Japan based two-wheeler automobile company, says that this year, there has not been any jump in the market in comparison with the sales of the past few years.

“The sale of motor bikes has remained stagnant from January despite launch of a few flagship motorcycles and good offers. There have not been good advance booking offers even from the dealers excluding a couple of them. The automobile sector is one of the most affected sectors in this slowdown and we have not been able to find out a good stratgey to cope with it yet,” he says.

He further says that the slump could not be foreseen and it came suddenly. The cash flow has also reduced in the market, which is responsible for more losses, he says.

Also read: Increase Public Investment to Combat Economic Slowdown: Left Parties Appeal in Joint Convention