Godrej Enterprises Executive Director Highlights GST Cut as Solution for Entry-Level Stress
The recent adjustment of Goods and Services Tax (GST) slabs is expected to make consumer products more affordable, particularly benefiting entry-level market segments, according to Nyrika Holkar, executive director at Godrej Enterprises Group (GEG). This tax reduction is anticipated to stimulate festive purchases and promote premiumization within the market. Holkar emphasized that the availability of financing options will further enhance consumer spending, as lower taxes will increase disposable income.
Impact on Consumer Appliances
The revised GST rates are set to significantly benefit the appliances segment of GEG, especially air conditioners (ACs), which have seen their tax rate drop from 28% to 18%. This change aims to make ACs more accessible to low and middle-income households, which currently have a penetration rate of only 10% in India. Holkar noted that appliances like ACs should no longer be viewed as luxury items but rather as essential products due to changing climatic conditions. The reduction in tax is expected to alleviate financial pressure on consumers, particularly in the middle-class segment, which has been facing economic challenges. GEG’s appliances division, which includes dishwashers, is poised to benefit from this tax adjustment, despite dishwashers having a smaller sales share.
Strategic Growth Plans
As GEG looks to capitalize on the GST changes, the company is also focusing on expanding its market share across its consumer portfolio. The group aims to double its revenues in the Interio (furniture) business to ₹10,000 crore within three years. This ambitious target will be supported by the introduction of new store formats and a strengthened online presence, as consumer preferences increasingly shift towards experiential shopping. Holkar highlighted the importance of adapting to the evolving retail landscape, where online searches now account for over 80% of consumer inquiries. GEG plans to enhance its digital strategy to better connect with consumers and improve delivery times.
Competitive Landscape and Digital Transformation
The competitive environment for GEG has intensified, particularly with the rise of online platforms like Amazon and Flipkart, which are innovating rapidly. The emergence of quick delivery services has also changed consumer expectations regarding shopping convenience. In response, GEG is prioritizing its online initiatives to remain competitive. Holkar acknowledged the need for the company to adapt to these changes, stating that GEG will enhance its digital capabilities and streamline its delivery processes to meet consumer demands more effectively. Following the Godrej family’s split last year, GEG has refreshed its brand identity and accelerated its digital transformation efforts, including the recent rebranding of its Interio business.
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