Consumers are happy to see the end of season sale coming to them early but the science behind it is not really something to cherish. The retailers have been feeling the heat of high inventories which make them bring in their summer sales nearly three weeks before their usual time.
The consumers are reluctant in buying merchandise at their MRP calling in for lower demand than expected for retailers. This has called for piling up of inventories which retailers are getting away from by introducing early sales and for a longer period.
“Another bleak year repeats itself this year for retail. Retailers in the space of clothing and accessories in particular have been hit. Inventories have piled up, despite a very cautious stocking approach adopted by most retailers. The stocks now have to find their way into the market to release store level inventory and monetise the same quickly. Therefore, the early embrace of the four letter word: SALE!”, says Harish Bijoor, Brand-expert and CEO, Harish Bijoor Consults Inc.
Consumers have become more conscious of how they are spending and on which products, more so with larger taxes, inflation and interest rates.
Moreover, with insurgence of best of brands in the online arena, through various e-retailers, the consumers now prefer buying online and what more, at better prices or deals. The trend of buying online has also had an adverse impact on the sales of physical stores.
“E-retail has added further to the damages of retailers. A lot of players in e-commerce space have been offering huge deals and discounts to consumers. This has eaten into walk-ins and bill-cuts at traditional retail outlets. The deals and discounts are totally irrational even. Early registration discounts offer Rs1000 to Rs 2500 at the maximum scale. Add to it product-wise discounts. Add to those freebies as well. The e-consumer has never had it good. Though this is being done only to build up data base of customers, who they can tap into continuously and discourage them from physical retail. And guess what, most are burning VC money on this process,” adds Bijoor.
On the other hand sale time for consumers comes as a relief where they can rationally think of spending their money and buying the latest merchandise at better price. What more, it helps retailers compete well against the e-retailers. Moreover, Bijoor views that, though its not really a good time, this also helps retailers clear up their old stock and monetise merchandise. The retailer essentially makes money from both ends, the consumer and the supplier, whose stock is otherwise stuck. It is a cash-flow release mechanism at play.
Let’s see if these long 'end of season sale' works well for retailers or not.