Adjusting to Change: Traditional Kirana Stores Ready Their Strategy for the Altered Goods and Services Tax Classification
As the Goods and Services Tax (GST) slab restructuring is set to commence on September 22, many kirana store owners across the country find themselves in a state of unease and uncertainty.
In Hyderabad, Suresh Kumar Agarwal, a kirana store owner at Mahboob Mansion Wholesale Market, is focused on completing his daily targets, largely unaware of the potential impact of the GST slab restructuring on his business. Meanwhile, Agarwal, another GST registered trader, has stopped accepting new stock at the old rates, signaling the beginning of the transition.
Kiran, a kirana store owner in New Delhi, is fielding questions from customers about the expected price changes after the GST changes, but he is unable to provide specific answers at this time. Similarly, Shahab, another kirana store owner, is expecting an automatic backend software update.
Several major Indian companies, such as Reliance Industries and Tata Group, have been proactive in managing the transition. They have updated their billing systems and supply chain operations, while employing inventory reduction strategies like discount sales and just-in-time stock management before the rate changes took effect on September 22.
Many kirana store owners, however, are unexcited but worried about how to price their existing stock. Some, like Agarwal in Hyderabad, are waiting for software updates and new stocks. Priya, a shopkeeper in Austin Town, Bengaluru, has not received any information about changes in packet sizes or prices from companies.
The bulk of kirana stores, which are not under GST, have no clear understanding of the changes. This lack of clarity has led to a defensive approach in managing inventory, resulting in a significant dip in primary sales from Fast-Moving Consumer Goods (FMCG) companies. Distributors and retailers are stocking up on fast-moving SKUs, while some are hesitant to take up new inventory before September 22.
FMCG companies are proactively trying to manage the transition, offering discounts to distributors and reassuring them that GST credits on old stock are still available. The new GST rate structure is expected to result in significant savings for customers.
Despite the challenges, kirana store owners exhibit a mix of nonchalance and cautious apprehension regarding the GST slab restructuring. Agarwal, for instance, is expecting a software upgrade to suit the needs of the new tax structure.
The transition to the new GST rate structure is expected to take two-three weeks. As the date approaches, kirana store owners will need to adapt quickly to ensure their businesses remain viable and competitive in the face of these changes.
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