Festive sales may fall ‘flat’ on extended discount season


August 31, 2012

Priyanka Pani, The Hindu Businessline
Mumbai, August 31, 2012

Even as brands and apparel retailers appear to have had a prolonged bumper sale against the backdrop of a general slowdown, festive season sales have got the short end of the stick. ‘Sale’ season in the country started around end-May, but was extended by eight weeks. For instance, Shoppers Stop is are still busy luring ‘shopaholics’ to stores with flat 51 per cent discount.

“What typically used to be a month-long phenomenon has become a 3-month affair now. Shoppers are trying to extract the maximum benefit out of these sales. The main issue now is whether demand will pick up during the festive season that starts with Ganesh Chaturthi,” said Devangshu Dutta of retail consulting firm, Third Eyesight.

Slowing GDP growth, poor monsoon and sustained inflationary pressures are hurting consumer confidence, says a report by research firm Espirito Santo. Fitch Ratings too has revised the H2FY12 outlook for the Indian retail sector to negative from stable, in view of a sustained deterioration in the discretionary spending ability. The firm has said it is unlikely to improve over the short term.

“Lot of purchases have become need based. People, apprehending a further slowdown in the economy and with the forthcoming festivities, have purchased in bulk. Retailers might not witness major shopping in the next 2-3 months,” Dutta said adding that poor monsoon could also dampen the consumer sentiment.

Retailers said poor same-store sales in Q3FY12 forced many stores to extend the sale period. Though the discount schemes helped boost volumes, it impacted margins.

Textile majors too are apprehending poor festive season sales. “There is an overall slowdown in the textiles sector,” said Thomas Varghese, CEO, Aditya Birla Textiles.

Rakesh Pandey, President (Retail and Business Development), Raymond, said the upcoming wedding season could help bring some respite.