Prices of some imported goods head south as Re strengthens

Prices of some imported goods head south as Re strengthens
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First Published: Mon, Dec 03 2007. 10 18 PM IST

Updated: Mon, Dec 03 2007. 10 18 PM IST
Mumbai/New Delhi: Till a few months ago, exclusivity was a byword for Baljit Singh Kohli, who sells the American premium retailer Bodum’s coffee and tea presses, glasses and other equipment.
Only a few shops stock it and still fewer customers can afford the range, where a tea press can cost around Rs3,500.
All that has changed since March.
The rupee has appreciated nearly 13% against the dollar this year, making Bodum products that much cheaper. “The change in price has increased our customer base,” Kohli, director of Brand Acumen Marketing, which imports the products, said. “There is a class of people that has an aspiration for these things and can now afford them.” Sales have risen around 15% over the last four months, he said.
While Bodum has dropped its prices, not all retailers have cut prices and passed on their gains to consumers even though their own costs of buying the goods has fallen. And for now they are getting away with it, because not all consumers are aware of the drop in prices for some goods.
While some imported products have become cheaper, others have remained the same or even become more expensive.
The reason all retailers have not passed on price cuts are the bottlenecks in the grey market and standard fixed international pricing for some brands. Some retailers also said imported products that are on shop shelves currently may have been bought a few months ago and that the full impact of the rupee’s rise will be felt only in a few months.
There is a 120-day lead time between when orders for imported products are placed and when the products are received at Big Bazaar, the 75- store hypermarket chain, said its head, Rajan Malhotra. So, goods bought earlier may be less cheap than those that will appear on shelves soon.
On 1 January, each dollar would fetch Rs44.26, whereas it fetched only Rs39.70 on Monday. So, products bought at later dates, closer to when the rupee hit record highs of Rs39.25 to a dollar on 11 October, may not have started appearing on store shelves yet.
It is no wonder then that several consumers Mint spoke to said they had not noticed any change in prices in the regular imported products they use.
At Garden Fresh, a neighourhood store in Mumbai’s central suburb of Matunga, packaged tortilla chips share space with Gujarati pickle, granola bars and posters for eggless cake. Prices of American food products have remained largely unchanged while those of some have actually gone up.
“Suppliers decide prices based on the amount of products they are able to import,” Garden Fresh’s proprietor Rahul Cheda said. “The dollar rate does not have much to do with it.”
At New Delhi’s INA market, too, prices of imported products are unchanged.
“Prices are same, rather the importers have increased the prices,” says S.K. Sachdeva, proprietor of SK Store, which is popular among expatriates because it stocks American household staples such as Quaker Oats, Hershey’s Strawberry Syrup and Heinz Peachy Porridge. “We told them the dollar has fallen, but they argue the products are becoming expensive.”
Sachdeva said prices have gone up to 10% in recent weeks. He could not explain why the products had become expensive. At Nine West, which sells imported shoes and accessories, prices have not fallen because they are fixed internationally and cannot be altered locally.
“The Nine West policy has not been reviewed even though we have seen a devalue (devaluation) of the dollar. Only when the pricing is reviewed by the brand principals can it affect the market in India,” said Shashank Jani, general manager operations, Fashion Brands (India) Pvt. Ltd, which is the Indian partner for Nine West.
However, some brands have been able to gain market share by dropping prices. In fact, the rupee’s rise coincided with a drop in import duties and at a time when several brands are setting up a presence in India.
At Big Bazaar, prices for American food products, including Pringle chips and chocolates, have dropped along with the dollar.
“This Diwali, chocolates were available cheaper so sales were definitely better,” Rajan Malhotra said. “We are a price-sensitive country. So, any drop in prices helps. So, this festive season, I would say chocolates are the new mithai.”
There are more such bargains at My Dollar Store, which is the Indian arm of an American discount store. At Sony Corp.’s India unit, prices for products ranging from colour television sets to laptops and handycams have dropped. For instance, the price of a DSC-W35 digital still camera has come down to Rs11,990 from Rs 12,990, since March.
At Mon Chateau, a Bangalore store that sells premium American furniture and home accessories, sales have increased as prices have fallen along with the dollar. “When the customer buys our products, they always compare the prices with European made furniture,” J Sasidhar, chief executive of Mon Chateau. “The prices of European furniture has not changed much due to the rupee’s appreciation and so the customers see more value in American made furniture.”
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First Published: Mon, Dec 03 2007. 10 18 PM IST
More Topics: Rupee | Dollar | Coffee | Tea | Bodum |