Retailers may cut prices to spur demand

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Mumbai: Retailers may cut prices to spur sagging demand and clear the mounting inventories, keeping in line with the government directive to deal with the demand-supply mismatch.

"The present slowdown should not last more than six months. Value retail is already back on track. Retailers may reduce prices in the next few months in an effort to make people buy more," Retailers Association of India CEO Gibson Vedamani said.

Discounts and bundled-offers on Diwali and Christmas had been offered by retailers to spruce up demand, he said.

"I expect third quarter (or Q3, which ends on Thursday) performance of retail sector to be hit on an average, without any significant growth as compared to last year."

Retailers are looking at enhancing operating efficiencies, he said when asked whether the industry has deliberated on bringing down inventories.

"As of January, they are limiting inventories because it is critical in maintaining gross margins."

Vedamani said mid-segment consumption, which is the key to India's economic growth, is steady and there is nothing to worry about. Consumer sentiment began wheeling toward normalcy the moment the government cut petrol prices.

Appreciating steps taken by the government have helped bring down inflation and interest rates, he said, "Liquidity position is much better now than it was till a week back.