Once upon a time, seasonal sales at brick-and-mortar retailers were highly anticipated events for consumers, usually happening about three times a year—post summer, winter and monsoon—for a period of 15 to 20 days each time. However, in the last couple of years, retailers are offering discounts almost every alternate month. This year, consumers are still enjoying the benefits of end of winter sales even though it is March. Says Rajneesh Mahajan, executive director of Mumbai’s Inorbit Mall, “Select brands are continuing with sales and promotions even as the fresh stock for summer is on display. In fact, a 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 as well, which many end up purchasing.” In 2017-18, brick-and-mortar retailers offered discounts almost every alternate month. The aggressive discounts started post demonetisation (in mid-December 2016 and continued till March 2017), then the next sale was announced before GST was introduced (from May 2017 till August), and soon after the festive season got over in October, discounts were announced from mid-December, which many retailers are still continuing with. Retailers were forced to offer aggressive discounts as sales declined and inventories piled up to lure customers to their stores.
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 at the same time. While sales have improved, experts caution that aggressive discounts are likely to impact margins of retailers by at least 10-15%. ALDO is continuing with a 50% off, Charles & Keith is offering discounts up to 70%, Global Desi offers 50% off, ethnic wear brand Jashn is still going with a flat 50% discount, 109F and Fusion Beats are offering buy-2-get-1-free offers, noi offering up to 50% discount Kraus and United Colours of Benetton are offering up to 50% off, Steve Madden is giving up to 40% off and Swedish retailer H&M has discount going up to 70% on select items. “Usually in a year, offline and online retailers hold two large sales during the end of the season. However, this year, despite a pre-GST sale, not everything got sold. Add to that a flat festive season. The ongoing sale is an effort by sellers to not only liquidate old stock, but also slow-moving items,” says Rajat Wahi, partner (management consulting) at consulting firm Deloitte India. Experts say retailers usually hold stock for four to six weeks, which has jumped to more than eight weeks, indicating high inventory due to slow movement from shelves. “With a rather bad festive season, when customers refrained from spending on clothes and other fashion items, discounts are being offered on items that did not sell,” said Vasanth Kumar, executive director, Max Fashion.
Vineet Gautam, CEO, Bestseller India, which operates brands such as Vero Moda, Only and Jack and Jones, pointed out that while mid-season sale is a regular phenomenon in the US and Europe, Indian retailers are adopting it now. “The idea is to create a new line of fashion every second or third week so that customers continue to buy new things. So the existing stock is sold at a lesser price by offering discounts to create more shelf space,” says Gautam. As for e-commerce firms such as Flipkart and Amazon, the latter calls the ongoing sales a tactical approach. Meanwhile, despite providing discounts of up to 60% on select items, Harkirat Singh, MD, Aero India, maker of the of the Woodland brand of products, notes that by giving heavy discounts, brands are spoiling consumers.