Thread by @StocksResearch

There has been a lot of talk about the life post lockdown opens and its impact on demand, many people are backing up pent up demand scenario.

So here is a thread on what i expect.

There are some reports that suggest that Chinese Luxury Retail stores have seen huge demand & people are taking it as a cue.

However, It is a fact that Lockdown for the longest duration comparable to India was only in Hubei Province.

The lockdown didn't last as long in other parts of China.

On demand in India, we have to understand that the demand post lockdown for various things will be dependent on how lockdown ends.

Rational economic forecasts are obviously not good and many job losses, pay cuts, business shut downs and bankruptcies are expected, But i am not going there.

If the lockdown ends with Scenario A - treatment/vaccine discovered & Coronavirus no longer being a threat.

People will feel VICTORIOUS, There will be a rush of hormones and that actually results in euphoria and a sharp demand uptick for shopping/travel/experience etc.

As you feel no threat in the air you breath or going out, you will feel free & victorious and may indulge in celebrations and getting back to normal life really quick.

In that case the only demand side problems will be due to economic impact of the lockdown, Psychologically demand should return if people can afford.

But, incase the lockdown ends in a phased manner Scenario B - with social distancing, masks, cases of infection continuing.

There will be no euphoria & no sense of victory, hence people would prefer sitting on cash while getting back to only MUST DO activities of necessity.

On Travel Industry, necessity will be the only travel that majority of people would like to go for.

The Millennials of the country that focused on "EXPERIENCE" will only continue with their wanderlust in Scenario A but with slightly less excitement and quantum.

If Scenario B plays out, the Millenials won't be keen to get an experience.

How lockdown ends will be really relevant for almost all the sectors linked to crowds going out & getting an experience, such as travel, movies, shopping, pubs, cafes, restaurants, amusement parks etc.

On sectors such as white goods, Many people going to consider a lifestyle change without domestic helps.

That can be result an initial spike in demand of washing machines, dishwashers, vacuum cleaners.

But sustainable demand can only comes if Economic situation remains healthy.

On automobiles, People who can afford and have not bought will obviously go ahead and buy a 2 wheeler or a 4 wheeler to avoid public transportation if Scenario B plays out, in Scenario A its back to Ubers, Metros, Trains,Buses and all again!

Higher chances of 2 wheeler + though.

Demand for online shopping will increase in both the Scenarios.

But, Physical Retail, Apparel Stores, Malls, Retail Chains will continue to see lower footfalls in Both Scenario A and Scenario B, Things going to be worse in Scenario B.

All in all, I feel the pent up demand theory needs to wait, A lot depends on how the fight against Coronavirus shapes up.

Till there is a threat, the Pent Up demand is not kicking in soon even if we ignore economic drubbing we are set to get.

END OF THREAD!