Retailers cross other side of midnight


August 2, 2010

By Gouri Shah

MINT (Exclusive Partner The Wall Street Journal)

DELHI, 2 August 2008

Mumbai: It was close to midnight and the crowd wasn’t showing any signs of letting up. The DJ was still spinning fast paced music and finger food and non-alcoholic energy drinks kept coming. And the hosts weren’t complaining that the party was stretching into the wee hours.

That was because the "party", which kicked off at 10pm and lasted until 2am, was hosted by denim marketer Spykar Lifestyle Pvt. Ltd and had already generated three times the revenue that a similar sale by the company during normal day-time hours at the Bandra store in Mumbai.

The midnight-sale by Spykar -open only to invitees such as loyal customers, celebrities and media-has become one of the many retail innovations that stores are using to get more shoppers into their stores. And, much like a "happy hour" in a bar, retailers are offering steep discounts during such "off" hours or on certain days when foot traffic is normally slow.

Benetton stores, for instance, offered shoppers additional discounts if they shopped at different hours, such as starting at 7am or say between 9pm and 11pm. These kinds of sales are par for the course in many Western markets, especially in the US, where local laws are much more flexible on store hours.

They are only now starting to happen in India though, much more as a response to weak sales in a slowing economy or as sales gimmicks to attract media attention-such as this Mint story.

Many retailers, saddled with excessive inventory and caught flat-footed by optimistic sales forecasts, have had to launch early "end-of-season" sales this year and the more innovative ones are trying to stand out in that deep discount clutter.

From homegrown brands, such as Kala Niketan, to major retail chains, such as Shoppers Stop, Westside and Wills Lifestyle, loyal customers are often invited to have the pick of bargains, sizes and fits in select hours or sometimes a day ahead of a conventional sale. Promod, a fashion brand, was doling out croissants and coffee to its best customers who had been asked to check out a special sale preview.

"The idea was to break through the clutter," says Sanjay Vakharia, director-marketing, Spykar. Surprised by the response, the company is now planning an all-India mid-night sale each year. "Something that’s more like a carnival," says Vakharia.
Benetton, too, says it will turn the annual sale into a festival that the whole family can enjoy. "We may consider letting out the space in front of our stores to different vendors and create a festive mood which can be enjoyed and experienced outside the store," says Sanjeev Mohanty, managing director, Benetton India Pvt. Ltd.

He says the idea came to him when he saw a long line of customers waiting to enter a Benetton store in the Vasant Vihar neighbourhood of south Delhi at 2am. "It was crazy, the line was snaking around the store, and some people were sitting on their car and eating pizza while they waited for their family or friends," he recalled. Benetton racked up eight to 10 times more revenue than it does in a normal sale.

The plethora of discounts and sales stemmed from the April-May period that, according to Darshan Mehta, chief executive officer and managing director of Reliance Brands Pvt. Ltd, "has been the worst season ever for the apparel industry."

Even before the stock markets tanked and the economy started slowing, events such as the Indian Premier League cricket matches kept shoppers out of many malls in the evening and over weekends. Devangshu Dutta, CEO of New Delhi-based retail consulting company Third Eyesight, says apparel sales are also likely to suffer in a downturn.

"While there has been a growth in income over the last few years, the spending is now fragmented over more products and services. In a slow down, some of these such as apparel, eating out and entertainment are likely to get hit quicker. Basics such as food and groceries will get hit later," he said. "The discounting phenomenon will also be visible in businesses that have expanded substantially in the last few years, such as lifestyle, food and grocery chains, etc."