Nupur Anand, DNA (Daily News & Analysis)
Mumbai, January 10, 2013
It’s not even mid-January yet, but a "flat 50% off" sale is already on at an apparel brand outlet at Mumbai’s poshest mall.
This unseemly break with tradition – the two-week-long ‘sale’ season used to start in the third week of January, offer nominal discounts initially but jack them up later towards half price is not a case in isolation.
Sale, that four-letter word with the power to smoke out even
the tight-fisted shopper from self-imposed shopping exile, is
now plastered across all kinds of retail outlets at malls.
What’s more, several brands are already offering ‘flat 40-50% off’ in the first week of their sale. And no one knows how long this year’s sale season would last.
Abhishek Ranganathan, analyst at Phillip Capital, says the trend of advanced sale started last year due to infrequent ringing of cash registers. “This was expected to correct from this season. But that was not to be. As a few brands launched their ‘sales’ early again this year, others had to follow suit. For, if you don’t, then you’ll end up losing business to the store next door.”
Retail industry observers say premium fashion brands started the season with deep discounts. Agrees the manager of the apparel outlet at Phoenix. “We’ve realised that we do better business in the sale month of January than we do in July-December. So, in order to attract customers, we’ve started with a flat 50% off.”
There’s more to it, says Devangshu Dutta, CEO of Third Eyesight, a retail industry research firm. “New stock typically starts coming in from mid-February. Since slow economic growth has affected sales for the entire year, companies had to start with deep discounts in order to free up cash.”
Early starts, prolonged duration, deep discounts from the word go… such aspects of 2012 sale had caused concern to the retail industry. And it’s no different this year.
Experts say discounts help inboosting volumes but eat into margins. Worse, a relatively longer sale season was also driving away customers who are not essentially bargain-hunters.
As a result, retailers had started correcting their strategy. Analysts point out that in the past six months, attempts have been made to check inventory and forecast demand. “We’ve been trying to shift to a quicker inventory churn so that we could curtail the sale season, but it may take a quarter more,” says the CEO of a multi-brand outlet.
Retailers say that the extent of footfalls in the first two weeks of the sale season will decide how long the discount period may be extended.
If sales fail to pick up in spite of discounted sales, the sale period may well stretch to a month like it happened last year, say experts.