The rapidly spiking dollar may increase the monthly bills of consumers in urban India. Already hit by double-digit inflation, the great Indian middle class may get yet another shock as retailers are contemplating to increase prices if they can’t contain the growing import bills. In fact, the dollar’s upward movement, from Rs 39 in January to Rs 47 in October, has already inflated the import bills of many retail chains though they have not increased the prices so far. Rajan Malhotra CEO Big Bazaar, India’s largest retailer by volume, says that they might hike prices if Indian rupee continues to depreciate further.
“If the trend of a rising dollar continues some prices are likely to move up as our forward bookings will get impacted. Since we are discount retailers, we will not be able to offer reduced pricing,” he says. The chain imports primarily suitcases, trolleys and toys from China, apart from food items. The company’s buying for the festive season is already over but imports in the next quarter are likely to be impacted.
Meanwhile, dollar’s rise has increased import costs for Spencer’s Retail by 10%. So far, the retailers are absorbing the rise in prices. But, they feel that if the rupee depreciation is not checked in time, they might be forced to pass it on to the customers. “We haven’t yet considered hiking prices of imported goods. We have no choice but to absorb the burden,” avers Samar Singh Sheikhawat vice president-marketing Spencer’s retail. Sale of imported goods contributes 25% to the company’s overall revenues. The chain imports over three thousand items in various categories like food, electronic goods, etc.
Many retailers have devised another way to beat depressed margins. Instead of importing they are now depending on local brands.
