retailers in India are extending their end-of-the-season discount
sales period to clear inventory that has been piled up due to
slowdown witnessed in earlier months.
Apparel sales in India have been affected due to the increase
in prices by 30-40 percent in last 12 months. The rise in the
price of raw material and the imposition of excise duty by the
Government on branded apparels has led to the increase in prices.
The consumer sentiment had also been affected due to rising inflation
that had left shoppers with lesser money to spend on clothing,
according to analysts.
Mr. Abhinav Zutshi, Brand Head - Jack & Jones (India), told
fibre2fashion, Winter season was little delayed this time.
Secondly, the market did not get enough boost that it needed during
October-December period - the best quarter for retail. So, most
companies have either advanced or extended their sale period to
cover up on that.
People have become skeptical because of recession in Europe
and the US. So, people are holding back the money in big cities.
Secondly, customers have more choices now. There are more brands,
so the money is getting split among brands, especially in big
cities, he adds.
Analysing the approach of extending discount sales, Mr. Devangshu
Dutta, Chief Executive, Third Eyesight, says, The decision
about timing and duration of any retailers discount sale,
and the level of discounts offered are determined by two major
factors: how much inventory needs to be cleared, and what the
competition is doing.
Sales over the last few months have been below expectations,
and I believe retailers have also been careful in growing the
square footage. Put together, that means that there is excess
inventory in the stores and distribution centres that needs to
be sold, to free up cash and to create space for fresh merchandise.
This is especially true in cases where there is a clear season-based
change of merchandise as it happens with most fashion brands,
Explaining consumer sentiment and discount sales equation,
he says, Consumer spending, especially discretionary purchases
such as fashion, is highly susceptible to sentiment. At this time,
consumers are certainly being careful with their money, though
the spending sentiment has not hit the lows seen in 2008 and 2009.
In such an environment, discount sales are certainly a way to
get consumers into the stores. The problem, of course, is that
everyone is spending on loud advertising at the same
time. For most retailers, it is a Hobsons choice
to spend on promoting discounts, or to not promote at all.
Forecasting about the current year for apparel retailers in
India, he comments, Everyone has to remember the old saying:
'This, too, shall pass!' Indias growth story will continue,
more people will come into the folds of the middle-class. Apparel
retailers just need to ensure that their business is alive and
around to benefit from that growth. If margins have to be sacrificed
to achieve better cashflows, it is better to do that, than to
hold out the pricing.
Mr. Aditya Nadkarni, Brand Head - Debenhams at Planet Retail,
adds, The speed of evolution of the Indian customer is amazing,
its like stone rolling down the hill the speed increases
at an accelerated pace. The consumer is very aware of the international
trends and is also now very demanding about the offer, the price,
the ambience, etc. So, it is very important for apparel retailers
to be ready to serve todays customer.