MARKETS ARE STILL PREPARING FOR THE GST REGIME
Scale is understandably cumbersome, so in India, any reform of this size, which impacts every business, is expected to take time to be implemented fully. A survey conducted among 35,000 retailers across India revealed some interesting insights.
1. About 2/3rd of retailers had heard about GST, but there were still a third that did not have much information about GST and how it is likely to affect them. This low awareness is more prevalent in rural areas and small shops.
2. Of those aware of GST, 1/4th felt that GST would positively impact their business, while about a fifth thought that it would have a negative impact. So, a majority of retailers might be uncertain about how GST will play out in the market.
TRADE REMAINS CAUTIOUS
- Overall stock levels declined in Q1 after demonetisation. In absence of Pre GST impact, they should have ideally increased back to their original pre-demonetisation levels.
- While overall stock levels at retail shelf show decline, the levels differ by categories, brands and channels.
- Stock levels have further dropped for few categories and have increased for some (especially for categories like sanitary napkins or several food products). Since there is no particular relation seen between stock levels and category prioritisation basis anticipated GST-related price changes, manufacturers have an opportunity to influence retailers and improve their stock levels in the market.
- Different brands are maintaining different levels of stock, providing a clear opportunity for manufacturers to gain an advantage by making sure that adequate stock pressure is maintained and there are no situations where they find their products out of stock.