Small mom-and-pop stores struggle to pass on GST gains

MUMBAI: For several small mom-and-pop stores across the country, passing on the benefits of the reduced GST cuts to the consumers immediately is becoming a challenge.For one, they have bought their stock from the distributors at the old rates and 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 which do not make very large sales daily, taking a hit on their margins is not something they can afford," said a trader, requesting anonymity. Also, not all kirana store owners based out of 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 than a few lakh," said another trader, adding that shops in larger colonies are not facing much implementation issues. "The real impact of the GST can be seen 10-15 days later," he said.New packs with revised prices are expected to hit the markets by mid-Oct. Firms have been actively sending circulars and communication on revised rates to distributors and retailers but it can be challenge for companies to track millions of packets of FMCG products sold by outlets across the country.

"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 Godrej Consumer Products MD & CEO Sudhir Sitapati.Wipro Consumer Care CEO Neeraj Khatri said the company is monitoring the firm's channel partners to ensure that the benefits reach the last mile at the earliest.

There's also some confusion among consumers too as they are seeking discounts on products where GST has not been changed, traders said.For some retailers, it is taking time to educate the sales staff and consumers on 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. Also, 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 shopfloor. We are actively implementing this through point-of-sale communication at the shopfloor as well as through digital communication, and our trade partners are fully aligned in passing on the benefits of reduced prices to customers," said Kamal Nandi, business head at appliances business of Godrej Enterprises Group.