Gift item business at the last gasp

TBS Infograph

Highlights

•    Before pandemic, monthly sale was Tk30-40 lakh which dropped to Tk5 lakh in Ramadan
•    Tk2,000 crore gift item market under threat for over a year
•    Many traders have left business failing to pay shop rent, employees' salary, bank loans
•    SME Foundation says gift item traders are not under SME incentive package as they are not directly involved in production
•    Traders demand extension of installment payment period of bank loans and VAT-tax waver
•    More than 3 lakh people involved in business
•    80% employees have lost their jobs
•    Sales during pandemic have dropped by about 70-75%
•    More than 20,000 gift item shops across the country
•    50% traders in the sector are doing business with bank loans

The ongoing Covid-19 pandemic has dealt a severe blow to the gift item business in the country as sales of gifts have fallen around 70-75% as an impact of the pandemic.

As different national or international days such as Valentine's Day or Victory Day could not be observed, and social gatherings and ceremonies such as weddings or cultural events have remained stalled, the country's Tk2,000 crore gift item business is now on the verge of destruction.

Traders involved in the business said the pandemic has posed an existential threat to them as in almost every gift item shop sales have decreased by 70-75%. 

They said that they are not getting any financial assistance from the government as the SME Foundation has not included the sector in its incentive package list arguing that gift item sellers are not directly involved in production.

Notable, the Small and Medium Enterprises Foundation (SME) prepares the list of the country's small and medium entrepreneurs eligible for receiving the government's stimulus package to make up the losses inflicted by the pandemic.

Yakub Ahmed is involved in the sector for 20 years, selling different gift items at his shop at Bismillah Tower at Chawk Bazar in Old Dhaka. His shop was closed for several months after the first outbreak of the coronavirus in the country in March 2020.

Hoping that the crucial days would be over and life would return to normalcy again through resumption of different social and corporate events, he reopened his shop in August 2020 and carried on the business for about half a year, paying shop rent, bank loan installments and employees' salaries despite incurring huge losses.

But after the onset of the second wave of the pandemic, he was forced to leave the business last week as he was not able to bear any more losses.

Yaqub Ahmed said, "Our products are basically luxury products that people buy after buying their daily essentials.

"At present, people do not have enough money at hand to meet their demand for luxury items. Schools and colleges are closed, social events are closed, and it is not clear when educational institutions would reopen and social and corporate events would resume.

"So, finally, seeing no light of hope, I closed down my shop for good to leave the business."

Like Yaqub, many other gift item traders have left the business after struggling to pay shop rents and salary of employees and failing to repay bank loans.

Affected traders demanded extension of installment payment period of their bank loans and waiver of VAT-tax to survive the pandemic.

Otherwise, it will be difficult for us to survive in this business, they said.

Abdul Awal, another businessman from Old Dhaka, has not given up his struggle yet. He has been importing and selling foreign artificial flowers, handicrafts, show-pieces and all kinds of gift items for 13 years.

Talking to The Business Standard, Awal said, "Before the pandemic, our monthly sale was Tk30-40 lakh, whereas in the month of Ramadan when the gift item sale doubles usually, we sold products worth Tk5 lakh only."

"I had 20 employees in my shop, now there are only five left. I want to sell the store now, closing down the business; but in this critical situation, I cannot find any buyer to buy the shop," he added.

Not only Yakub Ahmed and Abdul Awal, but most of the gift item traders also are not able to bear losses anymore.

Monir Hossain, president of the Shop Owners Association of Bismillah Tower, the central hub of the country's gift item trading, told TBS that there are more than 20,000 shops, large and small, across the country. 

"Investment in this sector is more than Tk2,000 crore while more than three lakh people are involved in this business. Already, 80% of the employees have lost their jobs as sales during the corona period have dropped by about 70-75%, he added.

Visiting different gift item shops recently at Mitford Road in Chawk Bazar, New Market, Chandrima Market, Bangla Motor and Bailey Road in the capital, it was seen that watches, spectacles and sunglasses, bags, home decor, jewelry, dolls, cards, show-pieces, electric shaving kits, manicure-pedicure kits, tiffin boxes, pencil boxes, water bottles, chocolates, DIY, household appliances, inflatable sofa, inflatable pillow, inflatable neck pillow, massage machine, plastic flower, silicone gloves for washing utensils, vase, key ring, sewing machine, colour lamp and different sports accessories are sold in those shops.

Usually people buy gifts in observance of various occasions including birthdays, religious festivals, anniversaries, national and international days, weddings and family parties. But since all these special programmes have now stopped for a long time due to the pandemic, there are almost no buyers in the shops now.

Zahidul Islam, a show-piece shopkeeper at Chandrima Super Market, told TBS, "I am in a lot of trouble now, after investing a capital of Tk20 lakh. I could not sell a single product all through the day today. People buy these luxurious products if they have any money left after buying daily essentials like food and clothes. But now people do not have money at hand; so, buyers are not coming anymore."

Aslam Hossain, general secretary of the Bismillah Tower Shop Owners' Association, alleged that the gift items traders did not get anything from the government's stimulus package to address the corona crisis.

He said 50% traders in the sector are doing business with bank loans. "We demand the government give us financial assistance, extend the bank loan repayment period and waive VAT-tax for the time being. Otherwise, it will not be possible for businessmen of the sector to survive the pandemic.

The SME Foundation is overseeing the lending to small and medium entrepreneurs from the government's stimulus package.

Mofizur Rahman, managing director of the SME Foundation, told TBS, "Only those who are directly involved in production are eligible for getting assistance from the government's stimulus fund. Those involved in the gift item trading are mainly importers and sellers, not directly involved in production of anything. So, they are not eligible for getting assistance from the stimulus fund provided by the government for the SME entrepreneurs."