Cash ban, GST may fail to dampen festive spending

Afterinitialhiccupsduetothe implementationoftheGST, shoppersare slowlybeginningtothrongretailstores. Retailersandmanufacturesacrosstheboard thatBusinessStandardspoketoexpectthe festiveseasonof2017- thefirstafterthecash banandtheimplementationoftheGST- to beagoodone. ARNABDUTTA, RAGHAVENDRA KAMATH& VIVEATPINTO write

After the initial hiccups due to the implementation of the goods and services tax (GST), shoppers are slowly beginning to throng retail stores.

At the Santacruz (West) store of consumer electronics chain Vijay Sales in Mumbai, some are looking to buy televisions and home appliances and others are shopping for gifts. "The occasion is auspicious," says Nilesh Gupta, managing partner, Vijay Sales. "Festivals such as Ganeshotsav and Onam are upon us, and the next two months will be hectic. Shoppers, looking for new products for their homes, will only grow. We are looking forward to a good festive season," he says.

Gupta is not the only one to be feeling this way. Retailers and manufactures across the board that Business Standard spoke to expect the festive season of 2017 — the first after the cash ban announced in November and the implementation of the GST in July — to be a good one.

"There is latent demand in the marketplace and the monsoon season has been good overall,” says Shekhar Bajaj, chairman and managing director, Bajaj Electricals. “So, consumers in urban and rural areas should come out and buy, benefitting companies. In parallel, the pain that trade faced due to the GST will ease. They will be ready for the festive season, since that is a big peak for them."

Vivek Gambhir, managing director, Godrej Consumer Products, also expects the festive season to be “positively surprising”. “Depending on how the pent-up demand is, the festive season could be better than one expected. Remember, there have been a few quarters of low demand,” says Gambhir.

While, according to Nielsen, the April-June quarter saw India’s consumer confidence index suffer a few knocks on account of the GST, the assessment by the market research agency is that the coming months would be better. This includes the festive period. The agency's assessment was based on findings that showed that while consumers were nervous about spending in May and June, before the GST came into force, sentiments would ease after the implementation.

India still remains among the world's top three countries in terms of consumer confidence, Nielsen said, with the likelihood of it staying there in the coming quarters.

The agency also said that four in five online respondents, polled in India during the AprilJune quarter, indicated an increase in optimism on their personal finances, implying that some of this money could be utilised for spending in the future, especially during the festive season when discretionary spends increase.

Vasanth Kumar, executive director of Max, a fashion retail chain, part of the Dubai-based Landmark Group, says, "The festive season looks fine. Overall consumer mood is buoyant and pooja sales have begun. It is at about 16 per cent in terms of growth over last year for like-tolike stores." Kumar says the company expects to maintain the growth for the rest of the season.

According to Rakesh Biyani, joint managing director of Future Retail, the festive season, this year, is early and it should do well. “We expect to report similar growth numbers we did in the June festive quarter as well. Big Bazaar had a growth of about 16 per cent for like-to-like stores in the June quarter. This was one of the best for the chain, and that trend should continue in the festive period, too," Biyani says.

Arvind Lifestyle Brands, which retails GAP, US Polo and other apparel brands, is expecting an incremental growth of 1015 per cent in the festive season this year over last year. "Macro indicators are looking good and the festive season should do well. I do not think there is any impact of the GST on sales now," J Suresh, managing director of Arvind Lifestyle Brands, says.

While companies such as Samsung, LG and Panasonic have unveiled new consumer durable products for the festive period, some firms are reworking consumer schemes and offers, as free gifts attract tax under the GST. Durable companies now plan to offer combo packs and bill each item separately by distributing the total discount offered against each item.

Mobile handset companies, too, have begun unveiling new models with at least 50 new launches announced so far.