With virtually every product from cars and air-conditioners to televisions sets and apparel now cheaper, consumers are expected to flock to stores starting Monday.
The festive season is tipped to unleash what could be the biggest consumer spends, in recent years, after the government lowered GST rates on about 385 goods and services and put more money into consumers’ pockets through income tax cuts.
With the start of Navaratri on Monday, sales are expected to pick up pace in the coming weeks, gaining momentum as Diwali approaches.
For their part, retailers are ready for the big retail rush having spruced up their showrooms, beefed up their sales teams and updated their billing systems.
Online platforms too have worked at a feverish pitch, stocking their warehouses, reworking seller interfaces and fine-tuning the logistics to ensure products reach customers on time.
Meanwhile the government is keeping a close watch to ensure that the rate cuts are being fully passed on to consumers.
Auto and consumer durable sales surge
Indeed, Sai Service, among Maruti Suzuki‘s largest car dealers, has seen an over three-fold jump in bookings in a month in the wake of the GST cuts, prompting the firm to set up more counters to manage booking volumes.
“We typically get 30 bookings a month but that has now jumped to 110 bookings. We have stepped up follow-ups with customers and they are coming out in huge numbers to book,” a senior sales executive at Sai Service said.
Other auto dealerships too have hired more salespersons to handle the surge in inquiries and bookings following the GST cuts announced on passenger cars. Two-wheeler dealers are expecting bookings to increase during Navratri with delivery likely on Dussehra, on October 2.
Small retailers such as Liberty Supermart as well as larger ones like DMart and Reliance Retail have updated their billing systems to ensure they reflect the new rate (5%). Existing inventory, at higher GST through offers and consumer schemes, has been cleared out to avoid any mix-up. They’ve been in constant touch with stockists and distributors to make sure the goods arrive on time.
Retailers of consumer durables such as Vijay Sales and Croma across Mumbai say their IT systems are in place to handle the surge in orders. The labelling will reflect the old and new prices in case of existing inventory. Moreover, there are festive offers in place to tap into the buoyant sentiment. Nilesh Gupta, director, Vijay Sales, expects not just large footfalls but also more sales this time. “Many consumers will be curious about the GST cuts, hoping to take advantage of it. There is a September sale at the moment at our stores to cash in on the sentiment,” Gupta said.
Devarajan Iyer, CEO & ED at department store chain Lifestyle India, said the retailer is in the process of fixing revised price tags on apparels and footwear between Rs 1,000-2,500, which now attracts 5% GST, down from 12%. “We should be done with this by Sunday night. We are also prominently advertising the revised price range on shop floors, digital and social media. The festive period is an important one for us and we do expect a boost in consumption,” Iyer said.
E-commerce gears up for GST rollout
Both Flipkart and Amazon have timed their festive sales to coincide with the GST rollout and their annual flagship sales will begin on Tuesday. Executives at these firms say that back-end systems have been revised with new GST codes, seller interfaces have been refurbished to ensure compliance and manage inventory flows with revised pricing as well as logistics networks have been expanded to ensure quick delivery. For instance, Flipkart will use its quick-commerce arm Flipkart Minute’s network across 19 cities and 3,000 pin codes in addition to existing delivery partners to fulfill orders during sale days.
Kanishka Lal (name changed on request), a sales executive at a consumer durables store in Vegas Mall, Dwarka, Delhi, said that with GST on appliances such as ACs and TVs above 32 inches lower at 18% from 28%, corporate clients are rushing to buy now. “They benefit via higher input tax credits on the purchases, which can be offset in subsequent GST filings,” he explained.
Shyam Gupta (name changed) at the DMart store in Thane is expecting bigger crowds at the store from Monday.”Groceries will see more price cuts, clothes and general merchandise may see lower price cuts. We will take about a week to apply the cuts on all products,” Gupta said.
Retailers at Delhi’s Manish Global Mall in Dwarka, including pharmacies, food and grocery outlets say they will monitor the new prices closely, as they procure the revised price lists from their dealers. The government has reduced GST on most drugs, formulations and medical devices from 12-18% to 5%. 33 life-saving medicines have been made GST-free. Some pharmacy retailers say that the new price lists will be displayed at their stores for easy consumer reference from Monday.
Many companies were offering their brands at the new prices even ahead of September 22, when the new rates officially kick in. At Liberty Supermart in Santacruz (east), Mumbai, grocery purchases made before Monday’s GST rate cut attracted bigger discounts of as much as 20-25% on some products and buy one get one (BOGO) offers on others. Most FMCG products have moved to the 5% GST bracket from 12% and 18% tax rates earlier.
“Retailers have been offering special trade discounts over the last ten days to ensure consumers can enjoy benefits of reduced prices. From Monday, the FMCG market will move to a new tax regime, existing stocks have been aligned with the revised tax structure, while new MRP stocks will reach retail shelves in the coming days,” Dharyashil Patil, national president, All India Consumer Products Distributors Federation (AICPDF), an apex body of distributors and retailers, said.
(Raghavendra Kamath, Kshipra Petkar and Urvi Malvania in Mumbai contributed to the story)
