Brick and mortar retailers have started offering longer duration sale of around eight to nine weeks, compared with six weeks offered in previous years, mainly to counter discounts being offered by online retailers and counter sales decline of around 25% witnessed in most categories, except grocery, post demonetisation.
The move is likely to impact the margins of retailers by at least 15 to 20%, while sales may increase by around 20%, Rajat Wahi, partner and head, consumer, retail and agri sectors, KPMG, told FE.
Rajneesh Mahajan, executive director, Inorbit Malls, said: “This time, the duration of sales is longer than previous years. Around six-week sale used to happen in previous years, while this time it is continuing for almost eight to nine weeks and many retailers announced sale ahead of the schedule. The focus is to drive sales and recover money from the dead stock.”
Mahajan said most of the brands in Inorbit mall have come up with sale a couple of weeks before the schedule. This year, the sale came in early as post demonetisation in Novemeber, sales had dipped by around 25% and retailers were not able to anticipate exactly how much time it would take for the situation to normalise. Since these decisions are taken at least two weeks prior as stocks have to be brought in to the store and pricing has to be decided, retailers didn’t change their decision at the last moment and went ahead with the sale.
Further, online players also announced aggressive sales in December-January which further forced their offline peers to offer discounts. Retailers like Shoppers Stop, Lifestyle, Marks & Spencer, among others, have all come up with discounts. As the sales have come in early, it has helped retailers to witness 14 to 15% higher sales in December, he added.
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Winter sales kicked in from mid-December, almost a month ahead of the usual mid-January schedule.
Flipkart Big Shopping Day was held on December 18 to 21, offering discounts up to 70%. Snapdeal announced sale on January 8 and 9, offering up to 70% discount. Amazon India announced ‘Badi Bachat’ on Amazon from Jan 20 to Jan 22, with exchange offers on electronics goods offering up to 80% discount.
Arvind Singhal, chairman, Technopak, said apart from the impact of demonetisation another factor which impacted sales was that the winter has not been so severe in December as expected, and retailers had to get rid of the stock by January end, because of which they offered early sales. Moreover, with demonetisation, many customers focused on paying trough e-wallets, pushing sales of online players.
Hennes & Mauritz India started offering discounts of up to 50% from December 23, and it is still continuing. Westside started up to 60% off from January 1 and is continuing with the sales. Shoppers Stop is offering discount of up to 50% from January 1 and is continuing with it.
Lifestyle too started started sale from January 1, offering up to 50% off. Fusion Beats, Chemistry, Pavers England among others too have started offering discounts ahead of schedule and offered up to 50% off. These sales are continuing.
Viviana Mall in Thane announced two-day flat 50% sale across brands on January 14 and 15. The mall will continue to host brand sales (up to 70% off) till February 12. Sunil Shroff of Viviana Mall said, “Leading anchor brands like Forever 21, Zara, Marks & Spencer, Lifestyle, Shoppers Stop, Home Centre, Pantaloons, Hypercity and Globus are participating in this shopping fair. This year we are expecting a rise of 15% increase in sales.”