Superstores passing bad time  

Published: July 23, 2018 22:02:18 | Updated: July 25, 2018 22:19:33


Superstores or retail chain shops still concentrated mostly in the capital with a few of them maintaining outlets in other cities are not in a good health now. On their tentative opening, these department stores could not be an instant success but then more people -- even from lower middle class -- started pouring in such outlets. At a point these stores started doing brisk businesses because of the advantage they offered of shopping an array of commodities under one roof and in an interior temperature maintained comfortable by extensive air-conditioning. Now those days are over. Business has declined by 15 per cent in the past six months, complains the Bangladesh Supermarket Owners Association (BOSA). They have pointed accusing fingers at the uneven value added tax (VAT) regime. They are right in this regard. Trade VAT is applicable only to superstores and therefore discriminatory.

That cost of setting up an outlet of any such chain shop is highest in the region is naturally not to the liking of the operators. But even this could possibly be ignored if the latest imposition of 4.4 per cent trade VAT was not there. The rate of VAT at some point was 2.0 per cent, then it was raised to 4.0 per cent and once again it was brought down to 2.0 per cent before raising it to the present rate of 4.4 per cent. It appears the authorities could not be sure of what the exact rate should be. Apart from superstores there are large groceries where from a fixed lump sum amount of VAT is realised. But superstores have to pay a big amount - one that is many times more than the groceries pay.

In a situation like this doing business for the superstores has become more challenging than it should have been. What such chain shops have not quite admitted is their failure to extend patronage to on-farm farmers. If they collect vegetables, fruits, fish and other perishable items from open market, they are unlikely  to maintain the quality of those items and make enough profit. If, instead, they made arrangement with farmers for growing various produces and collecting those directly, they could have cut the cost. In case of a few items they produce or procure under bilateral arrangement, they have an edge over the retailers in the open market.

Clearly, they have failed to benefit from direct contact with farmers by removing the share of middlemen. It is also evident from their complaint that the occasional anti-adulteration or quality-check drives do not help their business. Such drives will surely not. Their emphasis seems to be on the competence of the authorities conducting such drives. Here they surely have a point. Bangladesh also needs an agency like the US Food and Drug Administration (FDA) in order to determine the quality of consumer goods. The authorities now performing the job are qualified enough to check date-expired items on shelves. Many of these stores are guilty of exhibiting such date-expired goods. If there is a more competent authority, superstores may face even tougher times.      

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