Not the perfect ending

In the December quarter, Pantaloon Retail, the country’s largest listed retail chain, showed its lowest same-store sales growth figures in two years, signalling a continued slowing in consumer spending and economic growth.

BEGINNING BLUES

The inventory at Pantaloon lasted for 120 days on an average compared with 75-80 days, while Shoppers Stop, which has almost 58 per cent of its merchandise on sell-or-return basis from various companies, has a low inventory level.

Analysts say retailers are facing the impact of consumer belt-tightening. For the country’s largest department-store chain operator, Shoppers Stop, the same-store sales dropped 1.3 per cent in the December quarter. India’s largest retailer, Future Group, posted its highest weekly sales in February, while others, such as department store chain, Lifestyle, and footwear maker Woodland reported high sales growth as heavy discounts helped retailers bounce back after a sales slump in the last two months. “We always get substantial business during our sales period and that’s because most of the Indian consumers follow a shopping pattern and tend to shop more during sale. However, a winter sale (January-February) is always better than a summer sale. During a short-term discount period, more units are sold, which allows us to decrease inventory and temporarily raise revenues," says Harkirat Singh, Managing Director, Woodland India.

Future Group reported national combined retail sales of `650 crore around January-end (23rd-29th), which is 25-30 per cent higher than the last year, as Big Bazaar and Food Bazaar outlets ran the ‘Sabse Saste 5 Din’ promotion offer, and apparel and home products chain, Central, offered a flat 50 per cent discount on brands. Lifestyle increased discounts to 50 per cent on the Republic Day weekend from 40 per cent end-of-season sales. “Around 30 per cent of the total sales for Indus League come from EOSS. The margins are typically low during EOSS because of the discounting; hence, we aim at getting higher top-line numbers," says Rachana Aggarwal, CEO, Indus League.

Republic Day sales are part of the end-of season sales, and usually extend across four weekends starting from mid-January. Food Bazaar and Big Bazaar stores contributed the largest chunk of 65 per cent to the record sales of Future Group during the Republic Day week. Central, Home Town and Pantaloon have been running promotions for a week extra compared to the last year. Footwear and adventure gear maker, Woodland, has posted 22-25 per cent growth in the end-of-season sales period.

WORST HIT SEGMENTS

Apparel sales were badly hit after the government levied 10 per cent excise duty on branded apparels last year that led to a hike in product prices. An increase in raw material cost further added to their woes discouraging buyers. Analysts say, slowing economy, falling markets and rising equated monthly instalments have left lesser disposable money in the hands of people.

Pricing discounts is an important element of a product marketing campaign. Companies have always chosen a pricing strategy that helps meet their sales objective, enhances reputation and provides the best profit point for the market demand, which is entirely dependent on the availability of both new and old stocks.

DISCOUNTS GALORE

Watches and accessories brand, Fastrack, offered flat 25 per cent off on all sunglasses, bags, belts and wallets starting from mid-January to Valentine’s period as a part of its year-end sale planning. Although the company refused to share figures on sales with us, outlook at retail points across the country have made us believe that the sales were below normal. “Our growth ranges from 150-180 per cent during the offer periods as compared to non-offer periods," says Somprabh Singh, Senior Manager – Marketing of Titan.

LONGER THAN USUAL

A sharp decrease in sales due to hiked product prices and low demand has pushed apparels retailers to start the year-end discount season earlier than scheduled. While French menswear brand, Celio, which has a joint venture with Future Group, was on a sale for almost one-and-a-half months till Valentine’s Day, UK-based brand French Connection had its year-end sale till March.

Normally, these brands target to continue end-of-seasons sales for a month. Brands like Esprit had not only commenced its end-of-season sale early, by over a fortnight from December 31 this year, as against January 16 last year, it even offered a 40 per cent discount on the purchase of products. Even Italian premium brand Diesel was on sale from end of December, earlier than its usual period, which starts in January end. International brands like Mango, Vero Moda and Forever New have followed suit by offering up to 40 per cent discount. Since fresh inventories entered the stores by February-March, these retailers were eager to clear old merchandise, so that cash flow remained positive.

Sale figures at a leading jeans-wear brand is being highlighted by the plight of year-end stock, which was still made available, running into February end. The store person, who requested to remain anonymous, said that this year-end sale had been slower than the usual, prompting the brand to offer heavy discounts on the stock.

 The entire year-end sale period had been bleak, primarily due to numerous economic factors, which included weak sentiments of consumers throughout the year. Analysts warn the jump in sales does not necessarily indicate a revival in consumer sentiment because it is driven by discounts; the real picture will be visible only after budget and elections happen. The expectancy of the sector to fare well in the next two quarters is rather ambitious for the time being.

ONLINE TAKES CENTRESTAGE THIS VALENTINE’S

The rising youth consumer base has been acknowledged as tech savvy, and it is high time for the retailers to realise the obvious potential. Leading offline or online gifting giants, such as Ferns n Petals, are one of those who have made their first move in this regard. They have been growing at a regular pace year on year and December to February being the peak season, these e-retailers clocked some good numbers. “We grew at 30 per cent on offline and the online sales grew by 60 per cent compared to last year. Online sales are approximately one-third of our total turnover. We have 60 per cent male and 40 per cent woman buyers between the age group of 18-40 years," says Vikaas Gutgutia, CMD, Ferns and Petals. Portals like Tradus.in had introduced Mega Clearance Sale on all major product categories, offering flat 50 per cent discounts. They have been busy even on a day like Valentine’s Day, when one would mostly look up to gifting brands.

Tradus.in launched a special Valentine campaign, which received tremendous response from the customers wherein one lucky customer was awarded Apple iPad 2 (16GB model) on this occasion. Yebhi.com offered 40 per cent off on their footwear offerings. Gitanjali Jewels, with its various products, offered special Valentine’s collection which was available for limited period. When contacted about sales performance, these e-retailers remained tightlipped.

The impact of online sales has been apparent this year, with traffic penetration reaching more than a million for the first time this year. Industry experts foresee this trend picking up further in the next few months and believe the time is critical for retailers to be visible across both the platforms, ie, online and offline.