End of season sales: Boon or bane for brands and retailers?Wednesday, 08 August 2012
Everything is going on extremely well and as per plans so far with cash registers ringing and spreading positivity in the air. But while retailers are happy with the sale season, they are also worried about the seasons ahead once the fresh stocks arrive. Would there be the same response or will the shoppers disappear and wait for next sale season to kick-start? Is only discount retailing driving the apparel industry today?
No say some experts. As Ashish Dikshit, Chief Executive Officer, Madura Fashion & Lifestyle points out that people rely on discounting only when you have overestimated the demand or not read the market signals. “I think there’s room for pricing in the Indian market even now,” he says. Reiterating similar sentiments and disapproving the very idea of having two sale seasons in India, Shailesh Chaturvedi, MD & CEO, Tommy Hilfiger says, “In India, there needn’t be two ends of season sales because in July you are basically going from one season to the same season. In January that makes some sense because in some parts of India you are going from a cold season to spring and there is a need to discount winter products. And in discounting we don’t need to discount as much as American retailers do.”
Adding further, Chaturvedi opines, “I feel discounting is a function of the experience of the team. Brands run by less experienced teams rely on discounts. Instead of finding creative solutions, they panic. Heavy discounts are a disaster. If this trend continues, I don’t know how we are going to make money. If everybody in a mall gives 50 per cent discount, it’s considered a successful example. All malls will then follow suit.”
However, the fact is that people are definitely relying on discounts, hence brands and retailers have no choice but to do what people demand so that the old stocks get off-loaded giving them much needed profit margins. As Rakesh Biyani, Joint MD, Pantaloon Retail puts it, “If you want rapid response, you need rapid sales. If you want more people consuming, discount is one route.” So discount according to him is not bad for the industry but unprofitable discount is a problem. “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. People should believe in buying fashion at full prices,” he reasons.