1. To face online shopping assault, brick and mortal stores rely on demand; not to offer discounts

To face online shopping assault, brick and mortal stores rely on demand; not to offer discounts

Brick and mortar stores are going to rely more on promotions and festive demand to face the discount competition from their online peers during the ongoing festive season.

By: | Updated: October 7, 2016 2:30 PM
Shopping top reason for Indians to access internet; average spend Rs 9,400: Survey Whether a festive season will be lucrative depends on new stock and variety more than any other factor, Sunil Shroff, vice president of Viviana mall said.

Brick and mortar stores are going to rely more on promotions and festive demand to face the discount competition from their online peers during the ongoing festive season. Marketplace leaders, Flipkart and Amazon both launched their respective festive campaigns last weekend and claimed to have sold well over 3 million units collectively in the first 12 hours of sale. Offline retailers, however said they will not counter with discounts and stick to selective promotions instead. “The idea is to push the latest merchandise at full price during the festive season because people are in any case prone to consumption; a number of people get their bonuses at this time as well,” said Anupam T, vice president at Mumbai-based, Oberoi mall.

Whether a festive season will be lucrative depends on new stock and variety more than any other factor, Sunil Shroff is CEO, Viviana mall said.

Kapil Agarwal, vice president of marketing at Whirlpool, India said that the company is targeting strong double digit growth this season, with new launches in every category. “We have earmarked about 40% of our annual budget for this festive season,” Agarwal added.
The online sale might have seen some traction but not across all category of products, Shroff added. Pushing sales at full price during the festive season will protect margins, critical for brick and mortar retailers.

Several brands are offering promotions, without branding it as end-of-season-sale. For example, Steve Madden ran an offer of a 40% discount on the purchase of two pairs of shoes. To be sure, a similar offer is given during the brand’s end-of-season-sale that is held twice a year.
At H&M, consumers are getting a free shopping voucher of Rs 2,500 on a bill of over Rs 7,000. Bata, Shoppers Stop and Marks and Spencer are some others doling out similar, attractive offers, in the form of special offers or gift vouchers, which are tailored to make consumers come back and shop a second time within a short span of time. Forever New, a fashion brand is among a handful that has officially announced a mid-season sale. Every large mall will begin their own promotional activity from the next weekend, mostly a lottery to draw footfalls. Since last month, on the back of Ganpati festival, footfalls in malls have already increased by approximately 20%, according to Mukesh Kumar, vice president at Infiniti mall.

Although apprehensive on pegging an exact figure, a number of mall owners as well as retailers said they are expecting a double digit growth between October and December, the main festive months. Market analysts said the growth rate is likely to be between 10% and 15% on an average.
Given that in the past two to three years, average SSS (same store sales) has grown between 5% and 8%, an over 10% growth in sales is optimistic, Anupam T observed. Last year, Shoppers Stop’s SSS growth exceeded expectations at 17.4%, a run rate the company might find difficult to hold on to. Trent had clocked in 11% in SSS growth and Future Lifestyle Fashion’s store sales increased by 16%. The range industry experts are penciling in this season is exactly in the same range.

To be sure, although the online companies are flagging off the number of units sold, research firm, RedSeer Consulting estimates that all online marketplaces put together will not sell goods worth more than Rs 10,000 crore.

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