The new GST regime has replaced the complicated structure of indirect taxes. Well, at one hand it has helped the retailers in terms of easy taxation but also forced the retailers to pre-pone their eoss. GST has created a deep impact in certain categories. For example, ‘fashion’ which is one of the most discounted category during end of season sale(eoss). Under the GST structure, apparel costing less than Rs 1,000 is taxed of 5%, while a 12% tax will be levied on the ones costing above Rs 1,000.
In such scenario premium brands might be hitting hard during this eoss all these brands are priced above Rs.1000. However, Indianretailer.com spoke to brands such as Max Fashion, Lifestyle, amante, they all declined any visible effect of GST on eoss.
One thing which is certain is that this move will benefit non-premium brands which generate 80-90% of the sales from products worth less than Rs 1,000, but premium brands might take a hit.
How this time eoss is different?
Capillary Technologies' internal study on the impact of GST on EOSS revealed a projected sales surge of 2-3% for most non-premium brands including hypermarkets where 80-90% sales come from products worth less than Rs 1,000 while a proportional sales drop is expected for premium-brands where only 1-2% sales come from such products.
Speaking on GST effect, Smita Murarka, Marketing and E- commerce head, amanté, said, “Retailers have preponed the EOSS to capture the pre-GST euphoria and clear stocks. This has increased the customers ‘tendency to stock up thus increasing the sale above the planned in June.
Overall GST is good for the industry and will help in eliminating cascading of taxes. We are hopeful that this will help in passing the benefits to the consumer.”
Speaking further on eoss she said,” Our brand has EOSS only twice a year and care is taken that none of our core continuing merchandise is discounted. Only styles which are going out of season and needs to be cleared are discounted. We also ensure discounts from our side are consistent across all channels. If other brands discount themselves too often it does hit the credibility and makes the loyal customers wary of buying full price products.”
Consumer is winning!
As per International Monetary Fund (IMF) the adoption of the Goods and Service Tax (GST) could help raise India’s medium-term gross domestics product (GDP) growth to over 8% and create a single national market for enhancing the efficiency of the movement of goods and services. Now customers are not supposed to pay taxes-on-taxes which will bring down prices of most commodities and enhance product availability which will ultimately help the end consumers. Now they would have deeper pockets to splurge during the end of season sale.