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Frowns are becoming deeper across the foreheads of retailers since the items are flying off the shelves at paces that are far lower than what the retailers expect even after offering discounts that range up to 75%
Concerned with sluggish demand, major retailers across the country began offering flash discounts and end-of-season sales (EOSS) sales more than a month ago to clear shelves of piling inventories. But now frowns are becoming deeper across their foreheads since the items are flying off the shelves at paces that are far lower than what the retailers expect even after offering discounts that range up to 75%, The Economic Times has reported.
In June, a number of footwear, apparel and lifestyle brands launched end-of-season sales weeks away from schedule to clear inventory.
But despite the deep price reductions sales are yet to touch levels of last year and retailers are waking up to the fact that they might have to keep the discount gun firing for extended periods to get rid of the stocks to make room for the stocks that are scheduled to arrive for the new season.
ICICI Securities that analysed the market majors such as Shoppers Stop, Reliance Trends, Pantaloons, Lifestyle, VMART, Max and Westside produced a report on Sunday (2 June 2023) that detected a revenue dip of about 5-15% (on a year-on-year basis) during the April-May window. To address the decline an EOSS blitzkrieg was launched at least two weeks earlier in mid-June instead of the usual end-June schedule, the report observed.
Across the country, the discounts on offer from these retailers are a veritable delight for the shoppers. Discounts range from “up to 62%” by Shopper’s Stop to 25% by Pantaloons with Reliance Trends (41%) and Lifestyle (39%) making up the middle ground. VMART, Max and Westside have also resorted to discounts to lure customers though they have stopped short of a sweeping EOSS policy.
However, with demand refusing to pick up to the desired level, the discount fusillade might continue at least till mid-July.
“Last year there was a strong momentum leading to EOSS but this year momentum was being built from the second half of May due to the wedding season. But sales haven’t reached the last year’s level. During EOSS, it should come to last year level as we are expecting up to 40% increase,” said Satyen Momaya, the CEO of Cello, a French clothing brand.
Lifestyle CEO Devarajan Iyer said, “Growth has been slow in comparison to last year but the next two-three weeks are crucial. The task is to liquidate the inventory. Currently, the majority of the brand in on sale, which might increase footfall and sales.”
In fact, business decelerated since February, pulling down sales from the last quarter of FY23 itself.
Those who operate shopping malls think that brands would do well to follow the Dubai shopping festival to frontload the discount gun to attract droves of consumers. CEO of Forum Malls of Prestige Group is a strong advocate of such a combined assault on sluggish offtake.
Looking for the reasons for footfalls and sales not picking up to last year’s levels despite the effort by the retailers, some veterans also pointed out to the weather. “Rain during weekends has also played spoilsport in Delhi and Mumbai. People do not want to go out and get stuck in traffic,” said Ravinder Choudhary, vice-president of Unity Group. This group operates more than 12 malls in the high-consumption NCR and Punjab.