Discounting to acquire customers

t’s the middle of the monsoon season and retailers across the country are in the midst of the annual end of season sale hoping to draw in larger crowds of reluctant shoppers, as well as liquidate their stocks before the forthcoming festival and marriage season.

Apart from that, with the government taking several measures to open the multi-brand retail sector to foreign retailers, the emphasis is also on expanding the loyal customer base via these annual promotional activities and engaging effectively with them.

As part of this strategy, retailers of women and men’s fashion to home furnishing products are offering a range of promotional offers, and have also increased the inventory levels of merchandise across their distribution network, along with extended shopping hours.

“Sluggish spending patterns has led brands to grapple with much higher inventory levels and the need to address this issue, urgently,” explained Neha Shah, Marketing Manager, Pepe Jeans.

The response from consumers has been rather encouraging and the cash registers have been abuzz, with several retailers reporting upto 200 per cent jump in revenues compared to the earlier year. However, margins of retailers do take a hit during this period, point out analysts tracking the sector. Ajit Joshi, MD and CEO, Infiniti Retail, said, “We have also planned a huge burst of marketing activity for Croma - in August.”

End of season sales

This year, end of season sales (EOSS) commenced a lot earlier, in the middle of June, and have continued for about seven–eight weeks vis-à-vis a month in earlier years.

And across a range of consumer-based products the underlying reason for this trend is the rather lackluster consumer spending patterns in the run up to the monsoon season and the urgent need for retailers to take remedial steps. In addition, brands have not limited EOSS to simply discounts in the range of 10 – 50 per cent and allied promotional offers, but have also attempted to highlight special features in their product range.

For instance, Corneliani, an Italian fashion house, invited its loyal customers for a special preview three days prior to the commencement of its EOSS, and it included more personalised interactions with customers, and appropriately highlighting the wide selection of colours and sizes they offer.  “This sale season has definitely been better than earlier years,” said Salesh Grover, Business Head, OSL Luxury, Corneliani India.

Similarly, Bebe, encouraged consumers to visit particular sections in the store based on their budgets rather than simply focusing on reduced prices. This women’s fashion experienced a 50 per cent jump in this year’s EOSS compared to the previous year. Roma Manjrekar, Senior brand manager, Bebe India, said, “We extended our sale season as our old stock needs to be liquidated urgently before the launch of our new collection.” 

However, Gurprit Singh Sawhney, Promoter, Trendy Divva, a women’s fashion brand, pointed out that they had no choice but to focus on discounts, given incorrect demand forecasts. Sawhney pointed out that they offer 10 – 20 per cent discount on fresh stock, and flat 60 per cent on the older range.

Mall developers, too, were actively involved in ensuring the success of this annual promotional activity. Oberoi Mall, Mumbai, in its one day ‘flat’ 50 per cent sale, organised for the fifth year, saw a 25.1 per cent rise in its footfalls, and participating brands sales grew by 38 per cent compared to the previous year. Nirzar Jain, Vice President, Oberoi Mall, said, “We received an overwhelming response from our patrons on this day.”

Online boom

Online retailers, too, have benefited from the current sale season with several leading sites like Jabong and Myntra that have grown their sales by more than 15 per cent vis-à-vis the same period earlier, point out company officials. In addition, these players also highlighted that their discounts and promotional offers match those of traditional brick and mortar stores.

Mukul Bafana, Co-Founder, Jabong.com, said, “We are able to differentiate ourselves based on our wide product assortment and services.” Adds, Sandeep Singh, CEO, FREECULTR, “Promotional activity generates consumer excitement.”

Clearly, while consumers leave stores with several shopping bags during current EOSS, retailer’s margins would be under pressure. And, with  competition intensifing with  the entry of foreign players, retailers would need to pay greater attention to keeping their cash registers abuzz throughout the year.