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  1. Retailers feel the chill as late winter forces early sales

Retailers feel the chill as late winter forces early sales

With the annual winter “End of season” sales starting almost a month ahead of schedule, the flat 50% off sale in January has turned out to be a damp squib.

By: | Mumbai | Published: January 27, 2016 1:15 AM
Retailers and mall owners that FE reached out to weren’t able to put a value to the business but believe December was a good month.

Retailers and mall owners that FE reached out to weren’t able to put a value to the business but believe December was a good month.

With the annual winter “End of season” sales starting almost a month ahead of schedule, the flat 50% off sale in January has turned out to be a damp squib. At least four malls in Mumbai admitted that despite most stores offering a flat 50% off for at least a day, footfalls have been flat and sales sluggish.

The online onslaught is taking the edge off such sales at outlets of brick-and-mortar retailers, prompting Mukesh Kumar, vice-president at Infiniti Mall, to concede the strategy for the next sale season would need to be thought through carefully. “There seems to be a lot of fatigue,” Kumar said.

That’s a sobering thought given that e-retailing blitzkrieg, this time around, wasn’t quite like it was in 2014. As Pinakiranjan Mishra, partner and national leader of retail and consumer products at EY, pointed out, discounts have been smaller.

What had forced apparel manufacturers to kick off the end of season sales earlier than usual was the relatively mild winter. Typically, the winter sale season starts in the second week of January, running into February, but this time these took off well before Christmas. Whether it was Zara, Veromoda, Only, Charles and Keith, to Marks and Spencer, Sochi, Shoppers Stop or Lifestyle, no one was taking a chance. The competition in a dull market is killing and means one can’t be left behind. One big retailer admitted the sale had been advanced by a few days so as not to lose out on customers. “There’s just too much pressure,” the executive told FE.

Had business been brisk otherwise, the sales needn’t have been advanced. But the festive season wasn’t particularly rewarding and as Rajneesh Mahajan, vice-president at Inorbit malls, points out, the risk of being saddled with inventories for nine months is too high. “Aggressive promotions by e-retailers and high discounts have also forced us to advance the sales,” Mahajan added.

Retailers and mall owners that FE reached out to weren’t able to put a value to the business but believe December was a good month. That should boost retailers’ results for Q3FY16 given the festive season was spread across October and November and analysts believe they could report a 14-16% increase in same-store sales.

The change in the timelines for the end of season sales in December and January has disrupted the Retailer’s Association of India’s (RAI) plans for coordination between retailers. During the July season, RAI CEO Kumar Rajagopalan had told FE it had appealed to retailers to not have sales haphazardly but at the same time. “If all stores go on sale together, it makes a bigger impact on the consumer,” Rai had said.

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Tags: E Commerce

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