End of season sales typically account for 30 to 50 per cent of a retailer's total sales. The last few months have been big dampeners for retailers and now when economy is slowly reviving, retailers have started to nurture high expectations from the end of the season sale. However, soaring food prices and fresh memories of job losses early this year have dented consumer confidence. Consumer’s mindset is now more inclined towards savings.
“The trends indicate that the consumers are spending more on necessities than lifestyle. There is definitely an upswing, but there is no euphoria,” said BS Nagesh, Vice-Chairman of Shoppers Stop, the lifestyle retail company run by the Raheja group.
Clearing of the old stocks and inventory
End of season sales denote liquidation of store stocks to make room for the next season merchandise. “Forward buying and bulk purchase at the end of the season is a norm accepted by most of the customers and this is leading to more and more retailers adopting this to promote their sales,” says Balvinder Singh Ahluwalia, President, Koutons Retail India Ltd.
Normally, apparel retailers carry a gross margin of 30 to 35 per cent and would sell 60 per cent of their inventories on full price and the rest of the merchandise at 20 to 25 per cent discount. But now following the footsteps of western retailers, Indian retailers have also reversed the matrix as they are selling the major portion on discount, which is expected to bring down their margins by 10 to 15 per cent.
Retailers prefer going for end of season sale because they are hopeful of increasing their sales through offers and promotions. Retailers are sifting through reams of consumer data to plan inventory management.
“We are seeing a lot of buying. But there is a change in the price points at which consumers are making purchases,” says Kishore Biyani, CEO of Future Group.
The overall growth rates in modern retail have dropped from a heady 35 to 40 per cent in the last few years to around 10 to 15 per cent currently, according to industry estimates. Most of the growth is coming into the value formats in a challenging consumer environment.
Modus operandi for getting it right!
End of season is a time when retailers try their level best to entice customers. They want to grab the eyeballs of the shoppers and for this retailers advertise their brands innovatively.
To encourage consumers to go in for purchases of big-ticket and lifestyle items such as consumer durables, apparels, mobile phones and accessories, retailers have increased festive discounts. Top retailers are pumping in more funds into marketing schemes and are offering freebies and discounts to woo the consumer.
“The primary criterion is Consumer- his constant engagement with us and our brands and avenues/aspiration to experience the same. We are not into the discount rate game. We know that our consumers at this point of time look for something more and hence one will find different promotions across brands during this period. These promotions include combo packs, value deals including discounts,” views Ravdeep Singh, CEO, Planet Sports.
It is the occasion when big brands don’t refrain themselves from splurging on advertisements. Be it larger than life billboard or advertising to lavishly spending on full page newspaper advertisement, big brands don’t leave any stone unturned to cash in on the end of season fervour.
“Consumers are buying a lot of essentials. But they are also spending a lot more on quality products. In fact, there is an upswing in sales of new generation IT products such as laptops and hi-end durables such as LED (light emitting diodes) and LCD (light crystal display) televisions,” said Ajit Joshi, CEO of Croma.
There are some retailers in the industry like Planet Sports, who have got in collaboration with the international swimwear brand ‘Speedo’ to launch a contest on social networking site ‘Facebook’. Singh also added that Planet Sports uses all the modes of advertisements like print, radio and new age media, viz, mobile and online communication.
Ambiguity vs real deal
Although end of season sale seems to be a gala shopping affair, but still Retailer’s team found certain loopholes in the kind of deal that is offered by some retailers. For example, Ebony offers 10 per cent discount to the early bird customers (customers who shop before 1 pm) but a store of the company breach the deal only to the annoyance of the customers who even left the store without purchasing the chosen items once they were denied of the offer. Sales team at Ebony just rubbed off this incident as technical falter.
Same was the story at Marks and Spencer where discount was only given on certain items but display window shows ‘Flat 50% Off’. Another apparel brand Kazo promises to give 44 per cent off but doesn’t talk about its basket sale offer, under which one can buy four Kazo merchandises for just Rs 1,000.
When excitement will be back in retail scenario
End of season sale breathes a new life in retailing; it is the major crowd puller. EOSS is a major gala event in west, and following the same suit even Indian retailers are trying to make EOSS a big affair for the Indian customers.