Sunday, December 17, 2017

Time to grab cheap deals

GST rollout is prompting retailers to bail out old stocks of consumer durables at a discounted price

By Rounak Kumar Gunjan

With the Indian national cricket team getting off to a flyer in the ongoing Champions Trophy in England, and the summer scaling new heights, if you think getting yourself a television set or a refrigerator is almost a compulsion and is going to hurt your wallet; not so much.

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In the wake of the upcoming implementation of goods and service tax (GST), retailers are offering attractive discounts to lure consumers in order to sell out their old stocks. The 1 July rollout is expected to inflate prices of consumer durables along with bringing about stark changes in the tax regime of these commodities.

The proposed GST will raise prices of consumer durables like television, air conditioner, refrigerator and washing machine which will go up by roughly 4 per cent. GST, as proposed, will bring not only the consumer durables but smaller home appliances under the same tax bracket, which earlier varied from one state to another. The proposed tax stands at 28 per cent.

For durables like television, air conditioner, refrigerator and washing machine the cumulative tax (excise and value-added tax) was around 23-28 per cent depending on the state.

While some of these schemes are being led by parent companies themselves, others are expected to be run at the dealer level. For example, Panasonic India has announced a special consumer promotion scheme at its exclusive brand stores for the month of June across products. Other companies, such as LG India, are also offering attractive installment schemes on certain products for consumers.

Popular e-commerce portal, Amazon has been offering a 25 per cent discount on purchase of Samsung television sets with its competitor Flipkart offering discounts up to 50 per cent on electrical appliances such as washing machines and air-conditioners among others, over and above the already slashed prices.

Typically, the sixth month of the year is considered to be the weakest 30-day stretch from the sales perspective for products such as ACs and refrigerators, since summer is on the pleasant decline. May has been the strongest month during this period.

As an accepted norm, durables’ companies replenish stock at the trade level in 30-45 days, which is higher than the stock replenishment that happens in fast moving consumer goods, which is 15-20 days. Therefore, electronics retailers are just in time for fresh stock in the month of July, helping them meet their sales targets for June.

The move comes in the backdrop of fresh stocks coming in with the norms prescribed under GST that shall incur higher prices.

 

rounak@outlookindia.com

 

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