Sluggish quarter forces retailers into sale mode

After the removal of excise duty on branded apparels, retailers breathed a sigh of relief and were hoping to pass on the benefit to customers. However, yet another sluggish quarter with low consumer sentiment has forced them into announcing end

of season sales, much in advance. Now they are banking heavily upon the sale season to boost margins.

Along with slow economy, factors like rising realty costs, delay in mall openings, high inventory and increasing operating expenses in recent months as well as fluctuating raw material rates are seen bug bears to industry’s growth prospects.

Sale garners hope

Apparel and accessories brands and retailers are hoping to bounce back and maintain growth through end of season sale. For instance, end-of-season sales contribute around 20 percent to Shoppers Stop’s total revenue, so the retail giant will commence its sale season from mid-week of July. Meanwhile Lifestyle stores have already started their end of season sale. During the first quarter, majority of retailers witnessed soaring operational expenses impacting profit margins. Analysts say, the trend is same for most listed players like Trent, Pantaloons, Shoppers Stop and Provogue as well as unlisted players such as Lifestyle, Charles & Keith, Pepe, Hidesign and Wrangler.

Sale boosts footfalls

In fact, leafing through the pages of any daily newspapers would show that most brands have announced their sale season before time. For example, Tommy Hilfiger has announced its end-of-season sale with up to 50 percent off from July 5. Fashion apparel brand Bebe too has announced a special discount ranging between 50-70 percent on select pieces. Bebe stores will also offer discounts between 30-70 percent. Most of these brand and retailers take to sale strategy since it results in increased footfalls.

And as for consumers, most of them wait for the end of sale season to do yearly as well as festive shopping. For most of summer season stores had witnessed fewer footfalls. And this has forced many of them into offer early discounts to lure customers back. This indicates that consumers have smartly reduced their buying during full price periods. Instead, they are now more habituated to shopping during discount season and retailers have little choice but to give in to this trend till markets look up once more.