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GST to have an impact on the sales of brick and mortar stores; online players to make merry

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If the monsoon is said to hit and dampen the rural sales and to buy then, goods and services tax (GST) is expected to hit the brick and mortar retailers in the upcoming festive season. The retailers had already offered hefty discounts before the rollout of the GST, and now they are left with little to offer. Adding on to that, especially the single-branded retailers have a fresh-stock of inventory as most them sold their old inventory in the pre-GST era.

Industry experts are of the opinion that the growth in the festive season would not be more than 5% as compared to the sales of the last year. In this scenario, the online, e-commerce platform will make the most of their sales in this period. Last year Dussehra and Diwali were in the same month, unlike this year when we have a five-week gap between Dussehra and Diwali. Rakesh Biyani, who is the MD of the Future Retail group said that with a five-week gap to Diwali, the aim would be to maximize the sales and drive a standard growth overall.

Last year Dussehra and Diwali were in the same month, unlike this year when we have a five-week gap between Dussehra and Diwali. Rakesh Biyani, who is the MD of the Future Retail group said that with a five-week gap to Diwali, the aim would be to maximize the sales and drive a standard growth overall.

As per the estimates, the retailers suffered a drop in sales of as much as 20% for June, July, and August as compared to year-on-year. This year it was towards the end of August that the stocks started arriving and the consumers started returning to the shops.

Vasanth Kumar, who is the ED of Max Fashions, said that in the pre-GST period the customer bought very lavishly as there were rumors that the prices would hike post the rollout of the GST. This could be the reason that there might not be a huge increase in the sales during the festive season.

For a multi-retail branded outlet he added, the outlet can expect growth in sales by about 30% during the festive season every year. However, for Max Fashion, he expects only an increase of 18% this year during the festive season. Max Fashion is a subsidiary of the landmark group.

But the multi-brand retail stores are still expected to post discount to boost sales whereas the single brand players are expected to sell their products at full price. Harkirat Singh, MD at woodland confirmed that they would be selling the stocks at full price, though the company expects to clock in somewhere between 10-12% growth. Similarly, Rajesh Jain, MD, and CEO at Lacoste India said that the company would be selling the new stock at full price though they still expect growth in sales anywhere between 10-20% in the same store.

Industry experts had a different point of view where they believed that due to slow growth in sales in the last two quarters, it is expected to pick up again this festive season. The e-commerce platforms might have the upper hand as compared to the offline players as the online platforms are expected to offer very steep discounts.

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Anand Narayanaswamy works as a journalist based in Trivandrum, India. After unsuccessfully completing the company secretary course, Anand decided to step into software and technology route. More recently, he had a great interest in exploring about the Goods and Services Tax.

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