Every occasion of celebration is almost incomplete till you go and shop your faviourite items. With the coming of country’s 62nd Republic Day and Valentine Day, retailers across all categories are ready to woo the consumers with heavy discounts on various products.
Retailer across the country offer heavy discounts twice a year - one for spring – summer and the other for Autumn-Winter. Different brands position their discount schemes differently.
Big Bazaar, the largest chain of hypermarkets from Future Group, five years back, in 2006 initiated the concept of Sabse Sasta Din, which was organised on January 26, 2006. Further, this year, the company had launched a five day campaign, with Sabse Sasta 5 Din, organised from 22nd January, 2011 to 26thJanuary, 2011. Crossword, the leading book store India has also announced discount for its clearance sale. Crossword is offering discount rates on a wide range of books, movies, music & CD ROMs. Fastrack, the leading eyewear brand is offering discounts on all of its sunglasses. Hypercity, the leading hypermarket in India organised a - Hypercity Savings Parade on Republic Day. Under the offer, it offered discounts across several products in the store - from food and merchandise to electronic goods. Other retailers such as - Reliance Trends, Shopper Stop, Lifestyle Apparel, Adidas, Puma etc. to name a few have also launched their winter discount sales. In short, almost all retailers, atleast once in a year, if not more, like to offer discount to its customers, let us see why?
What leads to discount?
According to Vipul Gupta, COO, Yell India Retail, “Discounts at the store on brands help you to reconnect your customers; it helps in clearing your stocks so that you can stock your new collection.” Generally retailers with a wide range of merchandise mix offer high discount rates. But the reason of offering these kind of high discount rates would vary from retailer to retailer. Asheeta Chhabra, director, Chhabra 555 says that the main reason for discount sales includes:
1. Stock Clearance: Retailers offer heavy discount rates at the end of season to clear their old stocks and free-up space for fresh stocks. Retailers also get relief on margins from manufacturers to offer discounts.
2. Increase Footfall: Retailers offer heavy discount to lure the customer so that the footfall inside the store could increase. It also helps them to get the cost price of non-moving or slow moving stocks.
3. Competitive Market: Retailers desire to sell more. The increase in use of marketing strategy of clearance/ discount sale to clear up stocks has created a competition among brands to offer more lucrative discount rates than others.
Is it a right strategy?
But does a discount sale have its side-effects? Yes, if a brand offer discount on a fixed time every year, it makes customers to expect brands to offer discounts every year. It build an impression in consumers’ minds that retailer is going to offer discount sales during a particular month/ time-period. But is it a permanent solution for creating a consumer base? Will the customers be loyal to brand even after the discount period is over? Well the answer would vary from retailer to retailer. After all, if a brand is positioned well and if consumers believe that the product is priced right, it won’t bother him/ her to purchase at retail price.
Beside all these, it is a well known fact that retailer gains a hike of 30-40 percent or more on sales revenue through these discount/ end of season sales. This is the reason why retailer expects increased footfall and heavy sales during these seasons than compared to normal days. We also see great enthusiasm among consumers specially middle-class buyers, as traditionally they depend on these discount sales.
Rasi, an avid shopaholic avers, “Sale give us the chance to buy brands we can’t normally in regular retail. I save a lot for the end of season sales”.
No wonder, discount sale which are more transparent than they used to be earlier are big lure to customers and great avenue for retailers to clear their old stocks and free-up space for fresh stock!