Inventory woes: Retailers brandishing deep discounts to lure elusive customers
In a tactic to trigger sales before e-comm sites unleash their Republic Day sales, several brands brought forward EOSS by two weeks to early December instead of the customary January
After a brief respite during the festive months, the spectre of sluggish demand is again haunting retailers in the country once again with some prominent brands even offering 65% discount on lifestyle products and apparel in the ongoing end-of-season sales (EOSS). Unfortunately, such deep discounts have failed to stimulate sales, The Economic Times has mentioned in a report.
In a tactic to trigger sales before e-comm sites unleash their Republic Day sales, several brands brought forward EOSS by two weeks to early December instead of the customary January. EOSS is a popular instrument to liquidate stocks by retailers across the country.
“There is definitely a stress in the mass value segment and everyone was expecting EOSS to provide much needed momentum to the sale. But the growth is tepid and we are hoping the summer will be better,” Manish Kapoor, managing director of Pepe Jeans, told the newspaper.
In the first three quarters beginning January 2023 retailers suffered tepid sales. According to industry experts, this year apparel retailers might have to pass through another quarter of slowdown and any sort of recovery could take place only after April. According to ICICI Securities, most of the brands have reported flat to low single-digit sales growth during Q3FY24.
Confirming the apprehensions of the sector, chief executive of department store chain Lifestyle International, Devarajan Iyer said, “Despite discounts, growth is still muted and we see no signs of recovery during the January-March quarter. With the rise in disposable income, people are preferring to spend the money on leisure and travel but we hope demand to be back in April onwards.”
Inflation was supposed to be the main villain that impacted sales since January last year. Overall retail growth slowed to 6% in both March and April, 2023. It only registered a marginal rise to 9% in August and September before slowing to a 7% increase in October and November. This data was offered by the Retailers Association of India.
“While restaurants continue to do well, there is a stress in fashion retail and the growth is mainly due to the store expansion. However, we believe this is temporary as there will be demand for physical retail and brands need to regularly reinvent themselves,” said Muhammad Ali, the CEO of Forum Malls of Prestige group.
In a survey involving the country’s top seven retailers, ICICI Securities found Pantaloons, VMART, Max, Shoppers Stop, Reliance Trends, Lifestyle and Westside offering a range of discounts to lure customers. Shoppers Stop is offering the maximum 66% discount. Discounts offered by most brands fell within the 20-40% range. Reliance Trends is offering 40%, Lifestyle 41% and Pantaloons 42% discount.
Over the past six to eight months, most companies have been relentlessly pursuing a policy of slashing prices or offering steep discounts to get rid of piled-up inventory. According to retailers, the value-fashion segment appeared to have suffered the worst fall in sales.