The Tribune

By NATARIO McKENZIE

Tribune Business Reporter

nmckenzie@tribunemedia.net

Super Value’s owner yesterday said the supermarket chain would “run down” its inventory as the Value-Added Tax (VAT) transition loomed, as this “suits us better” than the Government’s proposed ‘virtual warehouse’.

Rupert Roberts said that to avoid any "major overlap" and becoming stuck with higher-priced goods, the retailer would likely "run down" its existing inventory and then begin importing goods from January 1.

Those products imported post-VAT implementation day will be sold under a new retail pricing structure, which will also encompass the import/Excise tax reductions announced earlier this year.

Mr Roberts, also the 13-store chain’s president, told Tribune Business that having examined the Government’s Virtual Warehouse proposition, it appeared he would be better off sticking to his normal routine as there was no point carrying excess inventory.

"We are studying it and watching it. I was together with the buyers yesterday and we were looking at our inventory on hand, our outstanding orders and our monthly sales. We are trying to plan it. It seems to us that there would be no point for us importing and having extra stock on our hands,” he said.

"It’s much easier for us to follow our existing system and be out of this merchandise by the end of the year, and have new stock come in on the first of the year. That would suit us better than the accommodation that the government is making for us.”

VAT is set to be introduced on January 1, 2015, at a rate of 7.5 per cent. Tribune Business reported earlier this month that the Government was developing a ‘virtual bonded warehouse’ concept to ease the transition for businesses with large physical goods inventories.

Details of the transitional warehousing arrangements to allow VAT-registered businesses to take advantage of the reduction in Customs duties come January 1, 2015, were released by the Ministry of Finance yesterday.

"The arrangements will be managed by the Customs Department, and may require qualifying importers to post a financial bond. With the bond in place, during the months of November and December, these VAT registrants will be allowed to import items targeted for duty savings without having to pay the taxes up front,” Customs said.

“Businesses will have to all report on sales of inventories made before December 31, and pay duty on sold items at the current rates that are in effect. Bonded items, which remain in inventory after December 31, will benefit from the lower rates taking effect on January 1, 2015. Remaining stocks will also be subject to VAT. Merchants have until February 28, 2015, to pay both the duty and VAT.”

Mr Roberts told Tribune Business: "We decided we would evaluate it every four week period. If we can use it we will, but some of our inventory will run us until the end of the year. We will re-order to run out.

“Some of these items, like macaroni and macaroni and cheese, are thousands of cases and our volume is big. We could plan to have zero inventory in the warehouse the week after Christmas and have shipments come in the first week of January, and it will be better than breaking our routine. It just seems that it would be better for us to stick to our norm.”

He added: "When duty changes, we get stuck with high-priced merchandise that we can’t cut the price on. We know that these items are going to be reduced the first of the year and we can plan for that. We will have a bit of shelf stock left over.

“We don’t want to run out, but we won’t do any major overlapping on these items. We will just let our stocks run down towards zero and plan our shipments to come in the first to second week of December, and when they come in they will go out at lower prices. It would be the seem thing as a virtual warehouse, but we are working our own virtual warehouse.

"I guess the idea is that on January 1, the Government wants us to cut these prices and we want to cut the prices. That’s our objective; to put food on the Bahamian table at the best possible price, but we are going to do it our way even though they have made accommodations.

“We may be able to bring containers in free, but we could still overlap the high duty which we paid and then we would have to average the price on the first time we cut the price. We want to just cut it, import January, get our new landed cost and set the new retail price. That is our goal.”