Organised retailers do not expect the Goods and Services Tax (GST) to impact their sales despite general fears that it could disrupt businesses, and hope to be fully ready for the uniform tax regime in the next few weeks. “As GST will be rolled out from July 1, we have to be prepared. It will lead to better compliance and an organised way of doing things,” Ashwin Khasgiwala, chief financial officer at Reliance Retail told PTI. “We are not anticipating any sales disruptions. Nobody has expressed concerns on that…For retailers, benefits will come as and when manufacturer change the prices, which we in turn will pass it on to consumers,” he added.
July onwards, large retail companies, including Reliance Retail, Future Group, Trent HyperCity and DMart, among others, are looking at aggressive price reductions. The common objective of all retailers is also that margins should be protected, while ensuring that prices remain under check. “We will reduce prices by 2 to 20 per cent on various consumer products,” said Kishore Biyani, chief executive of Future Group, which also sells lots of private labels. “GST will create a level-playing field for modern trade,” he added, explaining that the biggest challenge is to see that customers are not unhappy.
“I believe tax rates should not be so complex as to create variations that adversely affect consumers,” he said.
While there maybe temporary procedural hiccups, most retailers believe that the new taxation structure is about simplification and ease of doing business. Retailers are in talks with FMCG companies to align with their businesses, and ensure that margins for modern trade is not compromised, while continuing momentum of consumer sales.
“We are ensuring that our systems like IT are in place and are also working to educate the value chain,” Trent HyperCity MD Jamshed Daboo said. “Also, most large retailers are in talks individually with FMCG companies to ensure that their margins are retained, while ensuring lower prices to consumers,” he added. Companies like denim retailer Pepe Jeans said it has been preparing for GST since January.
“Since January, we have been placing orders with only those vendors who are GST-compliant. There are some challenges that will arise, though, but those can be sorted out over time. We are 90-per cent ready now,” Pepe Jeans CEO & MD said. Most retailers are awaiting more clarity on various issues, including input tax credit and e-way bills.
Several retail stores have announced big discounts especially in the consumer electronics segment ahead of the GST rollout, in a bid to to clear inventories and to avoid implementation issues.