Sale season begins early for retailers

If sales dip, can end-of-season sales be far behind? A number of footwear, apparel and lifestyle brands have launched end-of-season sales weeks away from schedule to clear inventory that has been piling up due to sliding sales over the past eight weeks, The Economic Times has reported.

The objective is clear: fresh stocks are supposed to arrive in July and retailers want to clear off the inventory before the truck park outside the stores. To achieve the end, retailers are also resorting to flash discounts.

The indicators are clear. Retailers association of India said that overall growth decelerated to 6% in March and April, something they attribute to “spending exhaustion”. This came against the backdrop of 15-20% growth in sales for listed apparel retailer during the January-March period.

The 6% growth, the slowest rise in the past 14 months, shocked the industry and triggered the sales push.

“There has been a slowdown in the overall market and brands would ideally want to exhaust their current inventory before the fresh stocks comes in July,” chief executive officer of Lifestyle, a fashion retailer, told the newspaper.

Retailers are somewhat caught by surprise since this year despite falling inflation, soppers have stayed away, whereas last year they braved surging inflation to buy discretionary stuff.

V-Mart and Pantaloons which cater to the lower end of the consumers continued to suffer under pressure. Aditya Birla Fashion & Retail and Page Industries said demand is slowing down at the premium segment too.

“Our overall growth rate this quarter has got affected significantly across our segments. It has also resulted in higher inventory and higher debt. This is probably the first full quarter where the impact of slowdown is fully visible across all segments of our business,” Ashish Dhariwal, managing director, ABFRL said. He said that the deceleration at the lower end of the market is now spreading to the upper end as well.

According to the malls, some segments are also offering discounts since retailers have to go in for quality control and even set up testing labs to obtain BIS licenses by July. “Footwear retailers also want to clear inventory before mandatory requirement of BIS. Retailers have also advanced their sales to compete with online retailers that are already offering discounting ahead of their mega sale,” said Ravinder Choudhary, VP at Unity Group which runs more than 12 malls in Punjab and National Capital Region.