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With the rupee depreciating to new lows, many retailers are considering either stopping the practice of stocking imported products where prices have gone up too high, or substituting these with local ones.
In the last three months, the rupee has depreciated 15 per cent, pushing up prices of imported products. Retailers who deal with such products say the actual price rise would be clear only when new stocks arrive at their warehouses.
Consultants say those selling imported consumer durables, apparel, food products, furniture, etc, are the ones hit the hardest.
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Amid the economic slowdown and the depreciating rupee, retailers are reconsidering their assortment and merchandise mix. “Out team is watching how the new prices are moving carefully. We have to potentially consider whether to bring all the products we used to stock earlier. We need to be competitive,” said Mark Ashman, chief executive of Hypercity, Shoppers Stop’s hypermarket chain.
About 65 per cent of Hypercity’s sales are accounted for by food products, including imported ones. “In a few cases, we may have to decide whether to stop bringing some products whose prices are too high,” Ahsman said.
K Venkataraman, managing director of Mahindra Retail, which runs kids’ and Mom & Me maternity wear chain said if the rupee’s depreciation continued, the company would have to review the value-adds and embellishments to keep pricing effective. It would also seek to negotiate for better sourcing and increase localisation, wherever feasible. “However, we will not tweak beyond a limit if there is a threat of endangering quality and durability,” he said.
About 40 per cent of Mom & Me’s merchandise is imported. The chain has seen a five per cent rise in the prices of products, as the goods were bought three-four months ago. If the rupee continued to slide, prices could rise 10 per cent in the near future, Venkataraman said.
For Kishore Biyani’s Future Group, about five per cent of its sales are accounted for by imported products. “We are looking at how to substitute imported products with local ones. In joint ventures, we are seeing how to source merchandise locally. But if the new stock comes at a price, there is no choice but to pass on the same,” said Rakesh Biyani, joint managing director, Future Retail. “With the rupee depreciating about 15 per cent, you will see new consignments coming with a price rise of 20 per cent, including the duty.”
Gourmet food chain Godrej Nature’s Basket, about 85 per cent whose merchandise comprises imported products, has passed on the price rise to consumers. But the chain claims the price rise hasn’t impacted sales. “Over the last quarter, the depreciating rupee has put immense pressure on the cost of imported foods. As earlier (lower-priced) stocks run out and fresh stocks start coming in, we are seeing price increases for a large chunk of our range from our suppliers,” Mohit Khattar, managing director, Godrej Nature’s Basket, said in a statement. “As a retailer, we have had no choice but to pass these increases to our consumers. Fortunately for us, our business has remained rock-steady.”
