Discounts galore

Today, sale or discount offer has become a never-ending affair throughout the year. Off-season sale, end-of-season sale, seconds sale, festive sale and monsoon discount offers, sales are numerous and are launched in different times of the year. All the sales are basically same: merchandises are sold at discounted price. Two major sales rule the kingdom of sales and discount offers. These are end-of-summer sales and end-of-winter sales. The current sale, end-of-summer-sale, is in full swing and will continue more or less till September-end. Same type of shopping fervour and bonanza prevail in metros and smaller cities alike. In attractive and colourful styles, discount hangings announce ‘20 % less’, ‘50% off’, ‘Buy 2, get 2 free’ and the likes, triggering consumers into a shopping frenzy. Yes, it is time to shop and get your wants at lesser prices. Sales and discounts create a win-win situation for both the consumer and retailer. The former has the opportunity to buy his or her wants at lowered prices. On the other hand, the later has an opportunity to clear his or her old stocks.

 

 

Retailers’ opinion

Indian consumers are price-sensitive and value-conscious and, therefore, look upon discounts offers as good opportunities. Buying goods, branded ones in particular, at discounted prices satisfy them in two ways: price and value. For a large section of the Indian consumers, sales also give a chance to acquire brands and labels of their aspiration, which they find hard to buy during off-season due to limited budgets. Explaining the yearly ritual, Mr Arvinder Singh, Unit Head, Ebony, Chandigarh, says, “Whenever there is a change of seasons, sales are launched and these are characterised by bulk buying. It is the right time for buying and get the right stuff.” Commenting on the general increase in buying and selling during sales, Ms Sunita Mehta, proprietor of Balujas outlet in Connaught Place, New Delhi, says, “The period experiences swelling of business and monsoon sale is simply a fillip to the rising demand. The peak season is during festivals like Diwali and Christmas when the business reaches its utmost level. Sixty to 70 per cent of businesses are made during these periods.” As regards companies’ policies for sales, Mr Rajan Malhotra, CEO, Big Bazaar, Future Group, says, “Different companies follow different rules. Some companies follow the early-route; they want to be the firsts in the market with their discounts. Others launch discounts during the common period all across the country.”

 

Why sale or discount offer?

With the change of seasons, mood, fashion and needs too do change. Summer has its own set of needs and fashions while winter has its own. Retailers do have to prepare accordingly. When one season recedes and another one is about to set in, there is a need to clear the shelves off the old stocks so as to make way for a new set of merchandises and goods. This compels retailers to resort to launching sales and discount offers. Stacking the products and not discounting and disposing them off will lead to losses as these products will be duly saleable only after the lapse of one year. Mr Singh says, “The reason we resort to discounts is to promote slow-moving stock, in other words, to liquidate old stocks and replace them with fresh ones for the coming season.”

Commenting on the rationale behind sale and discounts, Mr Suresh Jain, proprietor, Raymond Exclusive showroom, Jaipur, says, “The reason behind sale or huge discount is to clear the old stock so as to accommodate new fashionable products that companies launch as per the season’s demand. If we do not offer sale or discounts, it would be difficult to keep and manage huge stocks within limited racks of the stores.” Despite variations and minor differences, opinions of experts on the reason behind sales boil down to just one main point: clearance of stocks. Mr Promod, Head, Thapar outlet in Connaught Place, New Delhi highlights the same point when he says, “The only purpose of sales is to liquidate the old stocks.”

Season’s sales: 2007 versus 2006

Like last year, discount offers this year range in general from 20 to 60 per cent. Brands offering discounts beyond the upper limit of this range are less in number. In other words, there is lesser number of brands offering above 60 per cent discounts while brands offering discounts in the range of 20 to 50 per cent are many. Some brands like Puma do follow the policy of increasing the amount of discounts as the quantity of purchase increases.

Compared to last year’s, what are the changes seen in the current season’s sale? Well, experts find that there is hardly any change. Elaborating on the heavy discount offers in this season’s sales, Mr Malhotra says, “The trend this year is more or less the same as last year’s. I don’t see any change as department stores have scheduled their sales – post-summer seasons and pre-launch of summers.” According to Mr DPS Kohli, Chairman, Koutons Retail India Ltd, “This year, the value offering time period has started earlier than the last year’s in the entire industry. The consumer is becoming more and more brand and fashion conscious.” While comparing seasons’ sales in 2006 to season’s sales in 2007, Mr Malhotra opines, “Consumers are getting better and better discount offers day by day and it is good. Some people, of course, do underplay discounts. It depends on what inventory pressures people are sitting with. Even if there is no inventory pressure, you can plan for sale, make merchandise for sale and earn on it. It is a good season actually.” Sales are necessary goods for the market. With ever-increasing consumer population and booming of the industry in every aspect, the market will see greater and greater sales in the coming years.

 

Losses due to low margins

On the question of losses during sale due to low margins, Mr Malhotra informs, “I don’t think so because it’s just the format which you are working on. If you are running a departmental store, you normally do it once or twice in a year. And that’s the case of Lifestyle stores for the last 20 to 30 years. Hypermarkets have always been on discounts. It is in the nature of our formats and this is good for consumers.”  Commenting on the same issue, Mr Jitender, Branch Head, Vishal Mega Mart, Panchkula, Haryana, says, “The season for merchandises offering discount, is drawing to a close and we cannot afford to keep them in stock. Instead of waiting for one year, it is better to reduce the price and to sell them off. This is business and there is no question of loss.” Sales are necessary parts of a business for they help in clearing unnecessary and unwanted stocks. Offering discounts and selling merchandises at discounted prices does not lead to losses.

 

Range of products

Sale and discount offers spare hardly any category of products and the range of products cover almost all the categories like footwear, apparel, jewellery, kitchenware and accessories. According to Mr Malhotra, “All the products are offering discount – furniture retailers are giving heavy discounts because rainy season is come, even electronics products are on heavy discounts. If you look at apparel and footwear categories, you find that almost all brands are on discounts.” However, the categories that lead others are footwear, apparel and accessories. Speaking about the categories that lead in sales, Mr Singh says, “Apparel is on the top of the list.” Popular brands like Dockers, Arrow, Reebok, Allen Solly, Puma, Koutons, Louis Philips, Provogue and Van Heusen are available in the market with their attractive discounts that go sometimes up to more than 50 per cent. Discounts offers do make prices of merchandises reduced and this makes every budget capable of buying branded products. But in a few cases, discounts may be very huge and the product is sold indeed at a throwaway price. Mr Singh says, “We are offering some products at throwaway prices. So, while the actual cost of the item is more than Rs 1000, the discounted price is as low as 199 or a little more than Rs 200.” At present, sales at Ebony are going on in full swing and discounts do vary (up to 50 per cent) as per the category of products.

 

Maximum purchases during sale

Banners of sales and discounts are directed to all the classes of consumers and people of all the sections of the society do visit sales and discounts offers. Ram Chandra Aggarwal, Chairman and Managing Director, Vishal Mega Mart, says, “ Compared to normal time, there is, during sales, a difference in the category of customers but the difference is not much. See that every one likes to get benefits - it’s human nature. Every class wants to get the benefits of sale.” The class of a consumer matters hardly and it is no reason for not accepting lower prices.  According to Mr Kohli, “As in the normal time, fashion-conscious people from all walks of life come to our stores during sale.” Commenting on the category of consumers who visits sales most, Mr Vipin Kapoor, Director, Kapsons Fashion, says, “ This category comprises smart people, especially couples who are both working and have monthly income of around 30 to 40 thousands. They know what brands fit them well and, during sale season, they make the most of it. This sale season is more of a saving season for them.” However, the lot of young men, young women and families also come under the categories of people that sales attract most.

 

Quality of merchandise

Sales and discount offers do not hamper at all the quality of goods and merchandises. Mr Malhotra explains, “I don’t think the quality changes too much. If you look at the fashion industry, there is a liquidation that you have to do at the end of every season to make the new merchandise flow in.” Highlighting this fact, Mr Kapoor says, “These are standardised brands and the products are same in normal time as well as sale season. The store, which is giving more discounts, might be clearing up previous year’s stock.” The objective of sales is not to liquidate defected or inferior quality merchandises. On the contrary, the purpose is to clear unwanted or old stocks so as to prepare for the next season. Assuring customers, Mr Singh says, “Discount does not mean that the brand is inferior in quality. Discounts do not have anything to do with the quality of the products. The quality is as good as during normal time. During sales, our aim is to clear the old stocks and also to promote some slow moving brands.” Commenting about the quality of products sold during sales, Mr Aggarwal, says, “Absolutely not, products sold in sales are not different in quality but in designs and styles. Basically outdated products are on sale.” Thinking that products sold during sales suffer in quality is a misconception. Sometimes very old stuffs, not as good as the fresh items, are sold during sales. But, retailers usually make a different section for these kinds of products and sell them at throwaway prices.

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