ECONOMYNEXT – Sri Lanka’s John Keells Holdings is expanding its retail store network as consumer demand continues to recover, Charitha Subasinghe the President of the group’s retail sector said.
Last year six new outlets were opened and two were closed, taking the total to 138, JKH told shareholders in the annual report. Among new cities that Keells Super expanded to was in Jaffna.
Keells will add 15 stores to its network this year, Subasinghe said, with monthly sales growth now starting to grow 15 percent against last year.
Spending per customer has not recovered to pre-crisis levels, but more customers are now visiting the stores.
Keells has been consciously trying to bring down prices.
“We have been investing on the pricing,” he said. “You have to be on the side of the consumer. When a consumer is in trouble, you have to be on the side. How do you help that person to manage it?’
Sri Lanka’s central bank has been broadly running deflationary policy since September 2022 allowing missing their five percent inflation targeting which had triggered multiple currency crises and social unrest in the past, and allowing the people to rebuild their broken finances.
Sri Lanka’s rupee collapsed from 184 to 360 in 2022, amid aggravated flexible inflation targeting and potential output targeting both of which are based on backward looking statistical formulae, which critics say ignores classical economic principles that maintain monetary stability.
The practices were abandoned, to contract the central bank’s domestic asset portfolio in deflationary policy, after the country defaulted, allowing prices to fall.
The central bank also allowed the rupee to appreciate amid deflationary policy, ending a surrender rule, allowing traded goods and electricity and fuel prices to fall, analysts say.
Amid deflation, though basket values were marginally lower last year, people were taking more goods home at the same cost from Keells supermarkets.
“Average basket values were marginally lower by 0.3 percent compared to last year as the growth in the weight of purchase (the average number of units within a basket), was offset by a relatively steeper decrease in retail selling prices due to the deflation witnessed from the second quarter of 2024/25 onwards,” Keells told shareholders in its annual report.
When inflationary policy collapses the rupee, employers usually raise salaries in the next year or two years, slowly allowing the pre-crisis equilibrium to be restored.
The deflation may speed up the process, analysts say.
There are now fears of a return to inflationary policy with a so-called single policy rate and a pro-cyclical rate cut.
Keells has also started selling BYD vehicles after the public to import vehicles in February, subject to high taxes. Macroeconomists in the government banned the import of over 3,000 items in 2020 after cutting rates with open and direct market operations. (Colombo/May29/2025)
Continue Reading
