The trend of the early arrival of the end of season sale scenario continues this season as well. While it usually begins around mid of February, this year people saw the sale signboards up early January itself! Both retailers and customers seem satiated.
Sales are means to liquidate excess stock that has not been able to make it off the shelves. They are also required to maintain top line and drive footfalls. EOSS also give an impetus to sales figures ranging from 10-15 per cent. However on the bleak side, sales also mean dipping profit margins. For some retailers, margin erosion has gone up 15-20 per cent. Prolonged sales can affect EBIDTA (Earnings Before Interest, Taxes, Depreciation and Amortization) margin as well.
Nevertheless, experts feel that sales might bring some optimism in the market. Benu Sehgal, VP, DLF Place Saket says, “Planned discount has to happen if you want the market to grow. The western world is currently sitting on close to a 31 to 33 per cent markdown on overall sales. In India the markdown rates are 14 to 20 per cent. So we are not that bad. If discounts are happening, it’s for the good of the country and for the industry. It’s only going to grow the business. What we should ensure is that as discounts grow, so should full price sales grow.”
The sales time is what retailers now look forward to and adequately gear up for the same. Sales usually account for 40 per cent of their annual turnover. A boost in the short-term offered by these sales add to a retailers’ confidence.
For Shoppers Stop, Govind Srikhande, MD, Shoppers Stop says, “The EOSS went very well this year with Apparel being the highest selling category. We witnessed like to like double digit growth in sales and this spells a positive sentiment.”
At Crossword Bookstore, the sale started at about the same time as last year. Kinjal Shah-COO-Crossword Bookstores tells, “Customers have responded well to offers because they got exciting offers on new arrivals and bestsellers and also get throw away deals on range products like toys, stationery, movies etc. Bangalore and Hyderabad delivered a double digit growth.”
Telling their EOSS story, Punit Agarwal, Chief Executive Officer, Promart Retail India articulates, “The EOSS for Promart this year has been more than satisfactory in terms of sales. It has worked very well to liquidate the prior season’s merchandise. We believe our timing to start the EOSS has worked to our advantage along with the brand’s available and additional discounts offered. All our old stores which have seen one or more end of season sales have grown between 95-150 per cent. This year, we have seen an increase in sales and the percentage has gone up by100 per cent for the already existing stores which have gone on EOSS.”
EOSS is the time when Portico offers a discount up to 40 per cent and this is what assists them in converting customers. Arun Bhawsingka, COO, Portico New York, “At Portico, we have always felt that our EOSS sales are a great way for us to clear assorted inventory for the season and get our shelves ready for the exciting designs for the new season. We also feel that EOSS is the perfect time to convert aspirational ‘window shoppers’, who would like to buy into premium brands like Portico New York, into our customers who we hope will stay with us for years to come.”
Sales also lure a customer into buying products that they would not have otherwise added to their shopping cart. So it facilitates liquidation of the product as well as acts as a brand experience for a customer.
Footfalls too had their role to play. Customers walked in to lay their hands on discounted merchandise to suit their pocket. Malls and high streets witnessed a rush of people especially on weekends.
Time strapped customers could also satiate their need to shop with brands opening up till late hours or starting a tad bit early. Benetton stuck with its early morning shopping frenzy as every year which saw people in queues at their stores early in the morning.
At Promart, they saw a 500 per cent increase in footfalls and the conversions have gone up to 55-60 per cent. At Madame, footfalls shot up 130 per cent and Shoppers Stop saw a single digit increase. Seven East witnessed a 40 per cent increase in walk- ins. For Crossword Bookstore, the customer traffic growth has been rather flat as compared to last year. Customised offerings are what helped them improve the basket size.
Marketing advances are much needed and is what brings a customer to a store. Retailers are radically acknowledging this element and are investing much more in this realm.
Malls aid EOSS
Malls too are playing a significant role in aiding the EOSS. They are tying up with retailers in their malls to collectively run offers which become a star attraction at malls. This aids the retailers in significant ways by ramping up footfalls and also encouraging shopping to splurge more out of their pockets.
High customer sentiment
Customers have as usual been enjoying the sales time where they work towards adding new collectibles to their wardrobes. 66 per cent people prefer to shop when the sale banner shouts a ‘Flat’ percentage discount while 24 per cent people like a ‘Buy 1 Get 1 Free’ tag. Sale boards that read out an unclear percentage discount attract merely 10 per cent customers. The average spending during the sales time has also gone up. While 35 per cent people spend somewhere between RS 3000- Rs 5000, 32 per cent people spend Rs 5000 and above. About 33 per cent people spend less than Rs 3000 when shopping during sales. Apparels top the shopping list with 48 per cent people on the look out adding clothing to their wardrobes. Footwear is a close second with 36 per cent preference. Accessories score a third spot with just 10 per cent people shelling out money to accessorise their get ups. 45 per cent people rush to malls during sales and just a mere two per cent take to high streets. 55 per cent people take to malls because of the brand options that these locations offer. Some people put on the merchandise they buy the same season while others stock them to use the next season. There is also a third type who do both of the above. Customers also have a perception that prices today are hiked than usual and value can be attributed to them only when they are on sale. A whooping 53 of the people shopping today hold this notion. This might also an aiding factor which makes people shop for the upcoming season during the sale time. 43 per cent people wait for the discount percentage to grow. 57 people are of the opinion of shopping when the sale begins irrespective of the percentage offerings. 82 per cent people feel that as the discount percentage is directly proportional with the product offerings. 18 per cent people do not find their size if they wait for discounts to go up.
EOSS will continue to lure a customer in the times to come. Customers will continue to splurge during sales. Retailers will continue to put up merchandise with the discount tag to its advantage.