Future Group, HUL scrap over margins post GST

Future Group has threatened not to give prominent shelf space and display to Hindustan Unilever brands if the consumer products leader fails to protect absolute retail margins after GST is introduced on July 1. Kishore Biyani, Chief Executive at Future Group that runs big supermarket chains says if margins are not restored in absolute terms, then there will be need to restrict shelf space and market shares of these companies.

GST will subsume the factory-gate levy, excise, thus reducing the absolute margins available to a retailer if the margins is retained only percentage wise. Most consumer product firms have already agreed in-principle on increased margins in response to a call by top organised retailers Future Group, Reliance Retail, Tata Group, D'Mart and Aditya Birla Retail more than a fortnight ago.

Biyani added the company has to discount products for end consumers and need brands to support in sustaining efforts where HUL declined to comment on the development. Experts feel if Future Group gives less importance to HUL products, it would hurt both firms and on the other hand HUL’s business is important for retailers, they say.