Recent ‘end-of-season sale’ lured consumers to spend

The positive consumer sentiment in India is indicating that finally the dark clouds of recession seem to be paving a way for some sunshine. The recent ‘End of Season’ sale, which ended in stores across the country in August received a buoyant response from consumers. As per a recent report by Axis Capital,

the sale season footfalls and ticket sizes of transactions increased for most retailers and brands. Same-store sales growth — a key indicator of business performance in the retail sector too improved to 10-14 percent in the current sale period compared to 2-8 percent in the same perioda year earlier.

Co

nsumers loosen purse strings

Retailers’ margins are expected to be better this year due to lower discounting and the sale period is expected to end early too, Axis Capital said in its report, for which it spoke to retail companies across formats. “Discretionary categories like apparel and footwear are showing marginal recovery in urban markets, though most branded and big-box retailers expect a concerted improvement in the second half of FY15,” the report added.

Future Retail, which operates the large-format retail store Big Bazaar that sells products ranging from grocery to apparel, estimates the sale period to end early this year with the discounted inventory up for sale running out sooner than in the corresponding period last year. In FY14, Big Bazaar had to extend the sale period for a week due to damp consumer demand. Makers of footwear and apparel like Nike and Levi’s say that the rate of discount offered by them in the current sale season from 20 percent to 40 percent is lower than last year.

With the latest end-of-season sale helping retailers secure a significant share of the customers’ wallet, brokerages like Axis Capital are also re-rating the stocks of some of these companies. It has upgraded the Shoppers Stop stock to a ‘buy’ rating from ‘hold’ earlier with a target price of Rs 485 per share (up from Rs 423 earlier). The rating on watchmaker Titan has also been raised to a ‘buy’ with a revised target price of Rs 370 per share (from Rs 356). Footwear company Bata India’s target price was also hiked to Rs 1,280 per share from Rs 1,228 earlier.