Old Stock Woes: Many Small Stores Can't Afford to Take Margin Hit

Mumbai: For several small mom-and-pop stores across the country, passing on the benefits of the reduced GST cuts to consumers immediately is becoming a challenge.

For one, many kirana stores have purchased their stock from distributors at old rates. Selling products to customers at lower rates would mean incurring losses, which many cannot afford. "There are some issues on the ground. It will take 15-20 days for things to settle. For small kirana stores that do not make very large sales daily, taking a hit on their margins is not something they can afford," said a trader, requesting anonymity.

Moreover, not all kirana store owners based in smaller towns or remote areas may be aware of the changes in rates. It might take some time for the messaging to reach them. Small shopkeepers tend to keep stock for a week only and they have fixed margins. The value of their stock is not much more than a few lakh," added another trader, mentioning that shops in larger colonies are not facing significant implementation issues. The real impact of the GST can be seen 10-15 days later," he noted.

Helpline for GST-related Complaints

The finance ministry has asked consumers with GST-related grievances to call the National Consumer Helpline number (1915 or WhatsApp at 8800001915). They can also upload their complaints and queries on the Integrated Grievance Redressal Mechanism (INGRAM) portal.

New packs with revised prices are expected to hit the markets by mid-October. Firms have been actively sending circulars and communication regarding revised rates to distributors and retailers, but tracking millions of packets of FMCG products sold by outlets across the country can be a challenge.

While Q2 may remain somewhat volatile due to transitional issues, we are very bullish going into Q3. The period immediately following the GST announcement usually sees some slowdown as everyone waits for the new rates and market transitions take place," said Sudhir Sitapati, MD & CEO of Godrej Consumer Products.

Neeraj Khatri, CEO of Wipro Consumer Care, stated that the company is monitoring its channel partners to ensure that the benefits reach the last mile at the earliest. There is also some confusion among consumers, who are seeking discounts on products where GST has not been changed, according to traders.

For some retailers, it is taking time to educate the sales staff and consumers about the revised rates. Although our IT systems are updated, we are trying to place tags in the stores detailing old and new rates to communicate it to consumers. Additionally, sales staff need to be trained on the new rates. It's a challenge, but things should get smooth in a few days," said Anupam Bansal, MD at Liberty Shoes.

For Godrej Appliances, the key focus currently is to ensure clear communication of the new GST rates at the shop floor. We are actively implementing this through point-of-sale communication at the shop floor as well as through digital communication, and our trade partners are fully aligned in passing on the benefits of reduced prices to customers," remarked Kamal Nandi, business head at the appliances division of Godrej Enterprises Group.