Anand, Daily News & Analysis (DNA)
21 August 2012
are bleeding. The sale season whose duration has been
stretched of late, has pushed brands and retailers to despair,
in spite of shoppers frenzy. The sale season in its present
form is unsustainable, retailers say.
Traditionally, seasonal sales used to start in August. Last year,
they were advanced to July to give shoppers additional time to
indulge. This years sales started in June.
Sale was originally introduced to boost sales.
But this prolonged sale and deep discounting are not a good strategy.
Retailers need to take stock and devise a way out of these frequent
sales now, says Arvind Singhal of Technopak, a retail consultancy
Companies and retailers may get hurt as quality-conscious customers
who may not be bargain-hunters, are likely to stay off markets
during the sale duration. And bargain-hunters are likely to behave
likewise after the discount season, leading to subdued demand
for long periods.
So, the consequent demand-supply mismatch leads to huge inventories
which, in turn, necessitate longer sale periods. Companies are
now trying to correct this phenomenon by preempting inventory
Companies need to and are trying to get their demand forecasts
right to avoid pile-ups and to maintain profits, says Sanjay
Vakharia, director at Spykar Lifestyles.
What this can mean for customers is a shorter sale period and
fewer, and lower, discounts.
The companies may take a couple of quarters more to get
their stock pile-up right. Consumers can then say goodbye to these
three-month-long sales, says Abhishek Ranganathan, analyst
at MF Global.
Devangshu Dutta, CEO of retail consulting firm Third Eyesight,
thinks consumer demand has been subdued this year, and is unlikely
to change any time soon due to the dampened consumer sentiment
and dismal macroeconomic scenario.
Companies are not going to repeat their mistake of a
making wrong demand forecast, says Dutta. To check
the mismatch between anticipated demand and actual demand, companies
are reducing the time between orders and deliveries. With this,
they will have less stock to clear at the end of a season and
this will possibly lead to shorter discount sales.
This is a much-needed change, say retailers. Besides brands,
malls organise their own discount sales to increase footfalls.
Long promotional offers are bleeding companies. The retail industry
is finding this sale frenzy unsustainable, says the CEO
of an apparel-and-retail chain.
Retailers are also worried about changing consumer behaviour
and expectations. These days, shoppers wait for the sale season
to start before they step out with cash/ cards to buy. Given frequent
sales, the wait to buy stuff at half the cost is never too long.
Up to 70% discounts are another worry for the industry. We
are forced to offer deep discounts as everyone else is doing so.
We dont have a choice, says Sanjay Bindra, director
at Seven East, an ethnic wear brand.
Retailers acknowledge that sales and discounts attract consumers
to retail spaces like malls that would otherwise wear a deserted
look. But such footfalls, they bemoan, have come at a huge cost