Pre-GST purchasing leads to July fashion sales slump

By

Isabelle Crossley

Published
Jul 20, 2017

Many consumers anticipated higher prices after the July 1st Goods and Services Tax (GST) roll out and their advance purchasing has led to a sales dip in fashion retail this month.

June experienced a good sales boost, due not only to GST apprehension but also to the fact that, this year, Eid fell in June. The Lifestyle department store chain’s Deputy Chief Executive Jacob John stated that “it was a good June for us,” but that July saw a five percent sales decrease. However, this was a moderate dip compared to the average sales decline this month of 20 percent.

The reason many shoppers moved purchases forward to June was to escape predicted price hikes after the GST. Tax on clothing went from five percent to 12 percent on garments worth over 1,000 rupees upon its implementation. However, most brands, including Lifestyle, have not altered their prices yet and are absorbing the new tax rates themselves. It will most likely be several months before prices change in the fashion sector as new prices take time to hash out and customers need to be appeased.

The annual summer discount season kicked off a month earlier than usual this year in an attempt to shift stock. Sales have been going on since demonetisation in November and it is the longest running discount season since 2008-2009. With online retailers such as Amazon and Flipkart continuing to offer large discounts, brick and mortar stores are forced to follow suit despite high tax rates. Whilst some retailers such as Future Group’s Central malls tentatively aim to end their current sale by the end of July, other retailers like Zara foresee their sale extending into August.