1. …brick-and-mortar players claim their right to equality

…brick-and-mortar players claim their right to equality

Brick-and-mortar retailers have witnessed healthy sales growth during the ongoing end-of- season discount period, contrary to the perception...

By: | Mumbai | Published: January 29, 2015 3:19 AM

Brick-and-mortar retailers have witnessed healthy sales growth during the ongoing end-of- season discount period, contrary to the perception that e-tailers — with their round-the-year deep discounting — will eat into their business.

Most retail chains and branded standalone stores claim that sales have grown by 12-15% over the same period last year — in line with their targets. The current sale season began in January and is expected to be open till the inventory runs out.

“Retail sales started picking up in December 2014 because of the festive season and continued to grow through January,” said Gayatri Ruia, director at Mumbai-based real estate firm, Phoenix Mills, which owns and operates several malls, entertainment complexes, commercial units and hotels across Mumbai, Bangalore, Chennai and Pune. “So far, across our malls, we have clocked 12-15% growth in sales on average.”

Spanish clothing and accessories brand Zara’s flagship Mumbai store saw a 12-14% year-on-year jump in sales in January, says a store official who declined to be identified. This was in line with the target Zara set for the store and the growth was led by ladies apparel and footwear.

Other high-end brands are working on a target of 10-12% sales growth over last year, said a Reliance Brands official on the condition of anonymity. Reliance Brands is the licensee of brands like Diesel, Paul and Shark, Marks and Spencer and Steve Madden in India.

The ladies’ apparel and accessories category appears to be the driver behind other retail chains’ growth. Jitendranath Patri, head of marketing at Central, the Future Group’s fashion retail chain, said his stores witnessed a collective sales increase of 12-14% over January 2014, driven by women’s clothing and accessories.

The downturn in the Indian economy, combined with deeper penetration by e-commerce portals offering everything from clothes to electronics at heavy discounts, took a toll on retail sales in 2013, but things started looking up during the preceding sale period in July.

According to an Axis Capital report, the July 2014 sale season saw same-store-sales gaining significant momentum, growing as much as 10-14% year-on-year. This growth was sharp, compared to the 2-8% increase registered by these companies in July-August 2013.

However, retail analysts were apprehensive that the growth momentum would not sustain — the e-tailers ran a parallel discount season and marketed aggressively. However, these concerns appear to be allayed so far.

Moreover, to combat their online rivals, mid-end brands like Central increased their advertising budget during the current sale season. “Today’s customer is used to promotions and discounts. We spent 25% more this season to advertise our discounts,” Patri said.

Retail chains like Big Bazaar, the other format operated by the Kishore Biyani-led Future Group, are also tapping into the online space to advertise the offerings of their brick-and-mortar formats. “For the first time, we put up a catalogue of offers on the website because customers prefer to browse before coming into stores,” says Sadashiv Nayak, chief executive of Big Bazaar.

To make most of the long weekend around the Republic Day and compete with e-tailers like Flipkart and Amazon that ran special discounts on January 26, many retailers dropped prices further. For instance, Steve Madden sweetened its offer of ‘Buy two, get flat 20% off’ to ‘Buy two, get 50% off’. Big Bazaar launched its ‘Sabse Saste Teen Din’ campaign. Similarly, Zara dropped prices by an additional 15% during the weekend.

The response to the 26 January long-weekend sale was somewhat mixed. Flagship stores of high-end brands such as Zara and Steve Madden witnessed higher footfall but realisations did not improve exponentially compared to other weekends during the sale season. However, according to Nayak, Big Bazaar achieved a 15-18% boost in sales during the weekend over the same period last year.

  1. No Comments.

Go to Top