Shoppers hold tight to purses, awaiting new GST rates to take effect

Shradh season adds to caution, slowing retail demand

Shopping malls in the Delhi-National Capital Region painted a stark picture in the week following the announcement of the goods and services tax (GST) rate cuts on September 3. While shoppers flocked to the malls, electronic stores within the premises remained conspicuously empty.

 

At Gurugram’s Ambience Mall, while the corridors were bustling, salespersons at electronics stores like Croma and the Sony Centre shared that while customers were walking in to enquire, these visits were not translating into sales.

 

“It’s the double impact of the GST rate cut announcements coinciding with Shradh that’s causing people to hold off on purchasing large-ticket items this week. Business has slowed down substantially, and things are expected to pick up only after the new GST rates take effect on September 22,” said a salesperson at an electronics store in the mall.

 

In Hindu tradition, Pitru Paksha, also known as Shradh, is a period when most people are expected to refrain from purchasing luxury items.

 

Gaurav Pahwa, director at Lotus Electronics, agreed, saying that the chain is also offering discounts to stimulate demand.

 

“Most customers are holding off on purchases due to Shradh while also waiting for the new GST rates to come into effect, as prices are expected to drop by nearly 7 per cent. However, to clear out stock, we are running promotions like 10 per cent off on appliances,” he said.

 

Apparel makers are also trying to liquidate merchandise in their stores. GST rates on apparel priced over ₹2,500 have been increased to 18% in the new regime, up from 12 per cent earlier.

 

“Before the new rates take effect and items like jackets and linen dresses become costlier, we are offering discounts such as lower pricing for loyalty members and extending our sale on select items to push the stock,” said a store executive at a leading apparel brand at Promenade Mall in Delhi’s Vasant Kunj area, adding that sales momentum has been “positive” in recent days.

 

To counter the impact of slowed sales due to Shradh, some jewellery makers are also offering incentives to encourage purchases.

 

Titan’s CaratLane is offering limited-time discounts of up to 50 per cent off on making charges for select designs.

 

“With gold prices rising and consumer sentiment dampened, we’re offering various deals on making charges to encourage customers to buy gold and diamond jewellery before the wedding season,” said an executive at the company’s Ambience Mall outlet.

 

At Noida’s Mall of India, the situation is similar. While apparel stores continue to see sales, electronics stores remain vacant.

 

“This year, air conditioner sales have been sluggish — first due to the short summer season and now with people delaying their purchases because of the GST rate cuts. However, we have seen several enquiries over the past week and are hopeful that demand will pick up once Shradh ends and the new rates are implemented later this month,” said a sales assistant at an electronics store in the mall.

 

Consumer sentiment this year has been largely upbeat, said Pushpa Bector, senior executive director and business head at DLF Retail.

 

“The GST rate cuts will help instil confidence in consumers’ wallets. We can expect shopping festivals and value-linked promotions as brands look to offload older merchandise,” she said.