Physical retailers hit by marketing initiatives of online players

Not only their deep discount strategies but heavy advertising of their promotional activities adversely affected sales of physical retailers during the third quarter ended December 2014. According to the industry estimates, e-retailers spent around Rs 300 crores on advertising during the quarter, almost 10 times more than advertising spend of all the physical retailers together.

For example, Shoppers Stop reported just 0.8 per cent rise in its like-to-like sales during the quarter under review, its lowest in many quarters and 11 percent increase in last quarter. The retailer has blamed heavy investments of e-commerce companies for the decline and shift in shopping season around Durga Puja to the previous quarter.

Also Future Lifestyle Fashions, part of the Future Group posted same-store sales growth of 4.3 percent in its retail segment and 5.4 percent for department store Central in the December quarter compared to same-store sales growth of 10.6 percent in the retail segment and 11.6 percent in Central in the previous quarter.

As per the recent report by Edelweiss analysts Abneesh Roy, Pooja Lath and Tanmay Sharma, “Online players are expected to be aggressive in discounting since they have strong private-equity funding. Online retailers caused more disruption in the menswear and accessories segments.”