Though July and August are not the traditional shopping season in India, seasonal sales have become extremely popular with Mumbaikars.
Customers can’t get enough of discounts in sales and it’s the best time for retailers to clear old stocks
Though July and August are not the traditional shopping season in India, seasonal sales have become extremely popular with Mumbaikars. Take a walk down Linking Road, High Street Phoenix at Lower Parel or Atria at Worli and one can easily spot enticing offers with (upto) 70 per cent discounts.
The customers' willingness to splurge on these sales keep retailers pleased. As Abhishek Gouda, area sales and operations manager, Nine West explains, these sales are used to clear out old stocks to make way for more newer styles for the Diwali season. As Dhairyasheel Pradhan, Regional Manager for a premium menswear brand explains, the retailers generally work on the sell-through-ratio which talks about how much was sold in comparison to how much was produced. Certain styles may be well accepted by the shoppers and certain designs may not sell well. It is these designs which don’t sell well that are mostly put on sale as people may want to buy them for their brand value. The discounts being offered on the stocks are decided by the age of the stock at the sale.
But Manuja Shroff, head, marketing & corporate communications at And Designs India Ltd says that they have a different policy for their sale season. According to Shroff, when they announce a sale, along with the old stock they also make fresh stock for sales. These garments are reasonably discounted. This initiative also helps in achieving higher volume turnovers. It is a deliberate marketing strategy to build up a strong customer base.
But for the end-of-the-season sales, the profit margin is extremely slender which almost runs into losses, according to Lokesh Mishra, general manager, sales and marketing, Woodland India. But the cost of hoarding a stock is more expensive than selling the stock on sale as hiring space for keeping the unsold stock is higher than the loss incurred during the sales, informs Mishra. However, not every company can afford to sell its old stock on prices that are lower than the basic production cost.
So is the concept of 50-60 per cent discounts a myth? "It is a punch line used for attracting buyers. The average rate of discount is 20 to 30 per cent,” he admits. dnasunday@dnaindia.net
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