Retail wars: For offline players, discounts only answer to e-commerce

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Updated: December 1, 2019 5:19:56 AM

As per data from RedSeer Consulting, online players saw the biggest ever sale of Rs 31,000 crore during this festive season, within which the fashion category grew as much as 50% y-o-y.

Anurag Mathur, leader, retail and consumer goods, PwC India, said the mid-season sale is also a way to counter e-commerce — post the heavy sales on online platforms during peak festivities, offline retailers need to create their own sale periods in order to push unsold inventory off shelves.

Apparel retailers, grappling with subdued growth in 2019 due to the economic slowdown, continue to offer mid-season sale discounts even after the festive period is over to attract customers and push out unsold inventory. Brands such as Marks & Spencer, United Colors of Benetton, Jack & Jones, ONLY and Vero Moda have been discounting their products to the tune of 25-60%.

“Apart from offering discounts within a bracket of 20-40%, we have average transaction-led promotions across categories except for heavy winter wear,” said Sundeep Chugh, MD and CEO, Benetton India. The company plans to extend its mid-season sales till December 20, after which its end of season sale will commence. Marks & Spencer, too, has offered a flat 60% mid-season discount on select merchandise, with plans to continue this till stocks last.

Several offline brands have also doled out Black Friday sales — not a festive season that India is known for — from November 29 to December 1. “There was a bit of a lull after Diwali sales, so to create more reasons for customers to come back to the mall, we have decided to offer Black Friday sales for the first time,” said Rajiv Malla, CEO, R City Mall, Mumbai. Shoppers can avail of up to 60% discounts on various fashion labels during this sale in the mall.

As per industry watchers, though the festive period brought some customers to offline stores, the overall growth has been below expectations and hence retailers have now resorted to more discounting.

“Earlier, brands would do a weekend sale on occasion, but they are more aggressive this time. Some brands are planning to start their end of season sale as early as December 15 this time, instead of the usual end of the month,” said Yogeshwar Sharma, executive director and CEO, Select Citywalk, Delhi. As per Sharma, most apparel brands in the mall saw a growth of only 4-6% during the festive season and some even registered a flat growth.

Anurag Mathur, leader, retail and consumer goods, PwC India, said the mid-season sale is also a way to counter e-commerce — post the heavy sales on online platforms during peak festivities, offline retailers need to create their own sale periods in order to push unsold inventory off shelves.

As per data from RedSeer Consulting, online players saw the biggest ever sale of `31,000 crore during this festive season, within which the fashion category grew as much as 50% y-o-y. Compare this with offline fashion, where brands in ethnic and value fashion retail have seen around 10% growth during the year overall, while other categories grew below 8%, as per industry estimates. The same-store growth has been below 5% for fashion retailers. Satish Meena, senior forecast analyst, Forrester Research, shared that online players pried away sales to the tune of 10-15% from offline players across categories during the festive season.

Furthermore, the growth in the smartphone segment for offline retail has also been below expectations.“The smartphone market was expected to grow at a double-digit rate from 2018 to 2019 but it finished on a single-digit growth,” said Upasana Joshi, associate research manager, client devices, IDC. “The third quarter saw a growth of 9.3%, but it was mostly led by online while offline was muted.”

Consumer durables, however, have seen decent growth during the year. “Overall, the industry has grown at a rate of 20% over last year. Air conditioners saw good traction during summers with growth pegged at 35%,” said Kamal Nandi, business head and executive vice president, Godrej Appliances, and president, Consumer Electronics and Appliances Manufacturers Association. He shared that the refrigerator category grew at 13% this year, washing machines at a modest 6%, whereas microwave ovens observed de-growth.

According to Subhendu Roy, partner, AT Kearney, the outlook for 2020 is cautiously optimistic. “The focus of retailers will be on category management and share gain while the market revives,” he said.

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