Traditional family-owned retail shops are the backbone of Myanmar’s consumer market. Thus, any challenges they encounter from the COVID-19 crisis and corresponding policy responses have implications for the availability and affordability for final consumers. In their research, Mywish K. Maredia, Joseph Goeb, Isabel Lambrecht, Ian Masias, and Khin Zin Win utilize the findings from the second phone survey with food retail shops in Yangon and Mandalay to assess how COVID-19 related challenges are affecting retailers in urban areas. They also provide updated policy recommendations to improve business conditions for food retailers and help them cope with the COVID-19 economic crisis.
You can view the full policy note by Mywish, Joseph, Isabel, Ian, and Khin Zin Win in English here.
Background
In late July 2020, the Myanmar Agriculture Policy Support Activity (MAPSA) conducted a second round of phone interviews with urban food retail shop owners and managers in Yangon and Mandalay. Small-scale urban food retailers are an important outlet for consumers to purchase a variety of consumer goods. However, the COVID-19 economic crisis could bring dramatic changes to these retailers – not only on the demand side in terms of the food purchasing behaviors of consumers, but also on the supply side in terms of how food supply chains function and how they respond to these changes.
The second round of this study builds on the analysis of the first round of the food retail survey, which highlighted the demand side and the overall business effects of COVID-19, by adding detailed questions on three additional themes: supplier options, credit extended and received by retailers, and the use of modern technology and practices.
Effects of COVID-19 on supplier options
We explored three possible avenues of the impact of the COVID-19 crisis on small urban food retailers through its effect on their options for suppliers – the number of suppliers, changes in suppliers during the crisis, and shortages of food items in stock. Overall, the urban food retailers we surveyed had not experienced any major supply-side shocks in terms of these three effects (Figure 1).
Across all food categories reported by the 440 retailers surveyed, less than 5 percent reported having experienced a decline in the number of supplier options or to have required a change in suppliers at any time during the COVID-19 crisis. However,12 percent of food-shop combinations experienced an inventory shock at least once and were unable to restock items quickly enough to keep pace with demand.
Effects of COVID-19 on credit
In general, urban retail food shops in Yangon and Mandalay receive very few products on credit from their suppliers, so there has been little impact on this practice during the COVID-19 crisis. However, the practice of selling food products to customers on credit was much higher than procuring products from suppliers on credit.
Almost 14 percent of retail shops reported selling products to customers on credit before the COVID-19 crisis. Across all shops, the average share of total sales extended by retailers to their customers on credit was just 3.4 percent. Nevertheless, among those that offered products on credit to customers, this percentage as a value of total sales was 22 percent. Among the 67 shop owners or managers that sold products on credit to customers, 16 percent reported that the share of their sales made using credit in 2020 (post-COVID) was higher than in 2019.
For these retailers, among the reasons given for doing so was a need to maintain or increase their customer base. In contrast, for those retailers offering less credit in 2020, fear of customers not repaying the credit in a timely manner was the main reason for their making a lower share of their total sales on credit.
Effects of COVID-19 on use of technology
To obtain a more comprehensive picture of technology use among urban food retailers, the IFPRI-Myanmar research team asked respondents about their adoption of different types of digital, mobile phone, and internet-based technologies and delivery services (Figure 2).
The most widely used practice by these retail shops is the use of voice calls or text messaging features of mobile phones to take orders from customers – 36 percent of shops now use this practice, with 5 percent planning to begin doing so in the next three months. Additionally, over a quarter of current users indicated that they were using these technologies and practices more, 10 to 20 percent indicated that they are using them less, and most indicated they were using them at the same rate as last year. As such, near-term prospects and trends in adoption look encouraging for several technologies.
Policy recommendations
Based on observations of the current situation and the perceptions expressed by food retailers on what actions government might support to help them cope with COVID-19, the authors suggest the following updated recommendations, many of which can be implemented under the COVID-19 Economic Relief Plan (CERP) of the Myanmar Government.
- The government should continue to support supply chain actors, especially wholesalers, small- to medium-sized food companies, traders, and millers, to ensure that the wide variety of food products that they handle continue to flow to consumers.
- Include food retailers in government loan programs specifically designed to respond to the COVID-19 economic crisis.
- There may be a role for the private sector to provide digital marketing training and for the government to support efforts to modernize the retail food sector in order to usher in greater efficiency and resilience in the system. It is encouraging to note that investments in electronic platforms are a big part of the CERP.
- The government should extend the CERP policies that defer or waive taxes and exempt lease payments – CERP Actions 2.1.3 and 2.1.4, respectively – to include small food retailers in the current situation as well as in the future if there is a resurgence of COVID-19 in these cities.
Related blog posts
- COVID-19 and last mile delivery: Challenges for food retail shops (early July 2020)
- Crop trading during the pandemic: Lessons learned in Myanmar (Late June)
- COVID-19 and business responses: How are Yangon’s poultry farmers adapting to the pandemic? (Late July)
MAPSA is monitoring the impact of COVID-19 on key actors in Myanmar’s agri-food system. This blog post highlights one of the many recent surveys and policy notes that MAPSA has conducted to assess the emerging constraints that these key actors face and to mitigate the possible impacts of COVID-19 on rural livelihoods and food security. Additional blog posts are available highlighting MAPSA’s research on the impact of COVID-19 on key actors in Myanmar’s agri-food system. Surveys are ongoing, and findings and recommendations will be periodically updated.
Mywish K. Maredia is a Professor in the Department of Agricultural, Food, and Resource Economics (AFRE) of Michigan State University (MSU), based in East Lansing, Michigan. Joseph Goeb is a Research Associate in AFRE of MUS, based in Yangon, Myanmar. Isabel Lambrecht is a Research Fellow in the Development Strategy and Governance Division (DSGD) of the International Food Policy Research Institute (IFPRI), based in Yangon. Ian Masias is a Senior Program Manager in DSGD of IFPRI, based in Yangon. Khin Zin Win is a Research Analyst in DSGD of IFPRI, based in Yangon.
This blog post was prepared by Michael Wang, Mickey Leland International Hunger Fellow in DSGD of IFPRI, based in Yangon. The analysis and opinions expressed in this piece are solely those of the authors.
