No worries over GST rate rejig, Onam shoppers swarm stores in Kerala

Keralites are flocking to appliance and electronics stores for their annual Onam purchases, apparently unconcerned over a proposed GST rate reduction that could impact prices in the near future. 

Evenings in the week leading up to Onam are witnessing heavy footfall at major outlets such as MyG, Oxygen, and Nandilath G-Mart in Kottayam, as shoppers rush to take advantage of festive offers and discounts.

A section of consumers remains cautious, with some expressing concern over the anticipated GST slab reduction, which could impact the prices of goods, including electronic appliances. The potential price drop, expected to take effect around Diwali (late October) following the crucial GST Council meeting on September 5, is causing hesitation among some buyers.

In his Independence Day address, Prime Minister Narendra Modi announced a proposed overhaul of the GST system as a 'Diwali gift'. The four GST slabs of 5, 12, 18 and 28 per cent in the current tax structure will be simplified to just 5 and 18 per cent for 'merit' and 'standard' goods and services. A prohibitive rate of 40 per cent will be levied on ultra-luxury cars and sin goods like tobacco and liquor.

Despite this announcement, many consumers in Kerala appear unfazed by the impending changes. "Onam is a time when Malayalis spend big on purchases and it is unlikely that consumers will postpone such seasonal purchases until Diwali, even if GST rates are expected to come down," said Reni Thomas, Manager at Oxygen’s Kottayam branch.

"Onam falls in the Malayalam month of Chingam, which is considered an auspicious time for housewarmings and major purchases. Malayalis traditionally buy new appliances, electronics, and furniture during this period," Reni said. "Onam is also a time for giving surprises. Waiting a month or two for a GST revision, which is still not finalised, isn’t practical for most shoppers," he added.

Hareesh Mohan, Branch Manager at Nandilath G-Mart in Kottayam, shared a similar view. He said there has been no decline in sales or footfall compared to previous years in the lead-up to Onam. "So far, we've actually observed a rise in sales. The competition in this field is intense and this sales jump is significant," he said, adding that the Onam shopping rush is only just beginning.

Onam falls on September 5 this year, with festivities expected to peak starting this weekend. Retailers are anticipating a sharp rise in sales between August 30 and September 7, as schools and colleges close for the holidays.

Large electronic appliances such as televisions over 32 inches, refrigerators and furniture, which currently fall under the 28 per cent GST slab, are expected to be moved to the lower 18 per cent category under the proposed structure. But Reni Thomas said that hasn't deterred the majority from holding back on purchases. "Some customers have been asking about the revised GST rates and the possible savings they might get if they wait. Despite this, he added that Oxygen has recorded higher sales compared to the same period last year," Reni said. 

A manager from Pittappillil Agencies echoed a similar sentiment. He said that consumer confidence remains strong, and the anticipation of possible price reductions under the new GST structure has not had a significant impact on purchasing behaviour. He also said that the sales remain comparatively higher than the previous year.

Online retailers, including Flipkart and Amazon, are also offering stiff competition to shops in Kerala through various discounts and deals. Local retailers are keeping pace by providing similar offers. Store managers said there wasn’t much difference in pricing or promotions and that they remain competitive enough to retain customers. They dismissed concerns over the upcoming GST restructuring, expressing optimism that the new system, once implemented, will further boost sales.