End-of-year sales usher in hopes of revival

Attracting consumers back to the malls for shopping is increasingly turning out to be a difficult task for brands and retailers. Reeling under the pressure of slow economy and high inflation, consumers are showing little inclination of buying, leaving brands and retailers high and dry. This is the

reason why many brands and retailers, including bigwigs like Shoppers Stop and Pantaloon, announced the end-of-year sale early than usual this year.

Even the holiday season that followed the Indian festive period did not bring in much cheer to players, increasing their worries about the seasons ahead. However, with the end of year sale period starting early this time, malls and apparel brand stores are witnessing some activity amid as high inflation, high raw material costs, high rentals continued to negatively impact businesses even during December.

Wooing

the bargain hunter

One of the oldest retail chain Shoppers Stop for instance, expects to maintain its double-digit growth during the end-of-season sale season, since the sales generated during this period contribute around 20 percent of its annual revenue last year. The company kicked off its sale on January 4 in Chennai, Mumbai and Kolkata, which was extended to other cities the next day.

Most retailers suffered due to rising operational costs last quarter, impacting their margins. As per experts, listed retailers like Trent, Pantaloons, Shoppers Stop and Provogue and unlisted players like Lifestyle, Charles & Keith, Pepe, Hidesign and Wrangler, had to bear the brunt of slow economy and other related negative factors.

Pepe, for example, has begun its sale season on January 2 with a flat 40 percent offer on purchases of three or more garments. Westside announced up to 60 percent discount from January 2. Aldo has announced discounts up to 40 percent, Charles & Keith offers up to 30 percent off. Like last year, the industry expects only the sale season to attract some consumers and business.

Dealing with less profits

The consumer seems to have made it a habit of buying only during the sale season. So like the previous few seasons, brands and retailers were forced to announce the end-of-season sale early this time compared earlier when such sales used to start in the second or even third week of January. Meanwhile, deep discounts have affected margins and profitability. Though the industry understands this, the sale season keeps the cash register ringing leaving them with little option.

But efforts are being put in to change consumer behavior by adapting several measures like trying to reduce the quantum and offer periods of discounts, displaying fresh stocks with the merchandise on sale, cutting down on inventories and so on. For instance, ‘flat’ discount sales, that became a rage last year has now changed to ‘up to’ discount offers with most brands offering up to 20-50 percent discounts.

The industry has realized that though deep discounting woos consumers to shopping and boosts volumes, they also eat into profit margins. And relatively longer sale season also shoos away customers who are not essentially bargain-hunters. Also it has realized the need to change the consumer’s habit of shopping only during the discount period.

Experts say, this time most retailers have decided to close the sale in 4-5 weeks depending upon consumer response. However, if sales don’t pick up as expected, they would be forced to extend the sale period. In the last few seasons, sales were extended up to 7-8 weeks.