If you have been bitten by the shopping bug, you can’t be blamed. Well, at least, not this year. After all, it is not often that retail stores offer steep discounts in the months of May–June. While monsoon sales by apparel stores usually start by end of June and electronic stores do have some clearance sales in June-July, this year with the Goods and Services Tax (GST) starting from July 1, discounts are bigger than before.
For instance, electronic stores like Vijay Sales, Kohinoor and Digi1 are offering up to 50 per cent off on certain models or till stocks last. Snehanjali, another Mumbai-based electronic chain is advertising its offer as the pre-GST sale with a warning thrown in for good measure that “Prices for most electronic items are set to rise by 5 per cent’’. Electronic manufacturer Samsung is offering free DTH connection with televisions and extended warranty periods and free services with air-conditioners (ACs) and microwaves as part of its ‘June Fest’.
In case of apparels, with the input tax credit being made available under GST, prices will go down for cotton apparels below Rs 999 and remain unchanged for apparels above Rs 1,000, says Rakesh Biyani, Joint Managing Director, Future Retail. Apparels have a tax rate of 5 per cent and 12 per cent under GST. “June end-July is when end of season sales are held at stores. With the festive season this month, we are offering 50 per cent cash back on purchases of Rs 2,000,’’ he says.
Older models are being cleared: According to Arvind Singhal, Managing Director, Technopak, a management consulting firm, June and July are among the weakest months in the year for a number of categories. So these sales could be a way for many companies to actually use the pretext of GST and get their slow moving stocks out of the way by giving a discount. “Inventory lying in the pipeline will not be able to get any kind of tax rebate abatement. So, that is one reason why sales are happening. But GST is also a reason for stores to get their slow moving stocks out of the way by giving a discount,’’ he says.
Ghosal adds that the current sales are more clearance sales as stores push out inventory. “Every year, at this time there is a churn that happens. It is end of season and setting up for the new season. May and June is the period when stores flush out old stock,’’ he says. For instance, new television models are launched around August and between the festival season. Similarly, new laptop and computer models are launched in July when schools and colleges start their new terms.
It is likely that the discounts may continue post July, as stores clear their stock to make place for new models. “The festival period begins in September and usually there are not much discounts on the new models which will hit retail outlets by then,” says Singhal.
The discounts going on currently are more of a unit wise discount rather than a category wise discount. The discount depends on the age of the model and the particular store. Largely, they range from 15-25 on most categories. Though in stray cases they could be 70 per cent.
“Essentially the discount is catering to people who are deal seekers and who are happy to settle for older models,” Ghosal says.