It’s a tough world out there for retailers in this era of e-commerce. Even as you read this, the country’s biggest e-tailers have a mega sale on. Brick and mortar stores have tried many a trick to counter the onslaught of online shopping, matching offer for offer and, now, sale for sale.
Many brands and retailers like Wrangler, Chemistry, Fusion Beats and Marks & Spencer, to compete with e-commerce rivals that offer discounts for most of the year, have adopted the strategy of having that all-attractive tag of ‘Sale’ in their stores all year-long, even if it is for selected products.
This is a huge departure from the traditional end-of-season sale periods of about 15 days, thrice a year. Rajesh Vig, partner, PricewaterhouseCoopers, feels it’s a good strategy, one that helps brands and retailers to not only clear old stocks, but also attract customers to the store, which helps in selling fresh stock too.
Sunil Shroff, chief executive officer of Mumbai’s Viviana Mall, told FE, “We have brands like Marks & Spencer and Wrangler in our mall. Though they had an extended sales period this year, they have reported over 15% year-on-year sales growth in our mall.”
Shroff said this strategy is common overseas, and with e-commerce getting aggressive in the country, retailers here have also adopted the strategy. “Customers like discounts and this strategy certainly helps retailers boost their sales to some extent and counter online competition.”
Rajneesh Mahajan, executive director, Mumbai’s Inorbit Mall, said, “Select brands are continuing with sales and promotions while the fresh stock for summer is on display. In fact, few brands have adopted the strategy of offering discounts all through the year and have a separate section within the store to display discounted merchandise. This helps them to get rid of the old stock, while customers get to see the new stock, which many end up purchasing.”
While sales have improved, experts caution that aggressive discounts are likely to impact margins of retailers by at least 10-15%. However, the positive side is that the old stock gets sold even if at a slightly lower price.
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Rajat Wahi, partner and head, consumer, retail and agri sectors, KPMG, believes the trend is likely to continue till online players continue to remain aggressive on discounts. However, in the online space too, discount levels have been dropping over the past one year to an average of 50% from the earlier 70%. Similarly, discount levels at brick and mortar stores will also decline going forward.