Good news! End-season sales lure shoppers back to malls & high streets

17 Jul,2012

By Rasul Bailay, Sarah Jacob & Sagar Malviya


After a lull of more than two months, Indian shoppers are thronging malls and high streets once again, lured by the end-of-season discount sales, and bringing some relief to nervous retailers.


Retailers say early signs are encouraging than the same season last year, although these are early days and total actual sales numbers cannot be predicted yet. “So far it has shaped better than last year,” said Kailash Bhatia, chief executive of Pantaloons department chain.


Dipak Agarwal, chief executive of DLF Brands, that markets products of brands including Mothercare, Mango, DKNY, Alcott among others, said the average sales at the brands under the company’s portfolio doubled in the first week of July compared to the same period in June when the discount sales had not started.


Retailers have been nervous about whether shoppers would open their wallets amid a slew of negative news on the economic front such as increasing fears of below-normal monsoon rains, slowest GDP growth rate in nine years, US President Barack Obama expressing concerns about India’s investment climate, increasing food prices and prevailing high interest rates.


After lukewarm sales in May, many brands including Arrow, French Connection and Puma advanced the start of their end-of-season sales to the last week of June instead of the traditional July.


Now, with a whole host of other retailers joining in with discounts, consumers are back in the street in large numbers, causing traffic jams in main shopping areas this weekend.


At the Noida Sector 18 market near Delhi, for example, hundreds of shoppers were driving up and down this weekend looking for a parking space.


“It seemed I was shopping in the US. The sale looked genuine. I bought two Lee and two Wrangler T-shirts, two pairs of Albatross leather shoes and five pairs of sandals for my six-year old from Lifestyle and I paid just Rs7,500,” beamed a shopper holding a clutch of shopping bags at The Great India Place, the largest mall in Noida.


DLF Brands’ Mr Agarwal says many retailers were apprehensive of the slowdown and through early sales they were trying to avoid an inventory build-up. And he expects consumer spending to remain high in the coming months.


Jitendranath Patri, head of marketing at Central, a department chain owned by Future Group, shared Mr Agarwal’s optimism. “There is a long festival season starting from August and consumers will have something to celebrate each month during Ramzan and Diwali,” he said.


Others such as Arvind Lifestyle Brands CEO J Suresh and Indus League Clothing CEO Rachna Aggarwal, however, warn that the positive response to discount sales need not necessarily mean that the good run will continue post August when most of the sales are over. “End-of-season sales never gives the true picture,” said Mr Suresh. “It is more important to see if sales will stabilize after the discount sales period or if a slowdown will continue,” he added.


Mr Bhatia of Pantaloons said more and more customers now wait to shop during the sales seasons. Almost 30 per cent of Pantaloons’ revenues are generated during the discount seasons for the last four-five years.


While the footfall has grown this discount season, Mr Patri of Central said the average ticket size of a Central customer too has increased to 2,500 this from 2,300 last year, making it a double whammy.


A spokesperson for German sportswear brand Adidas AG said the company was expecting double-digit growth at its like-to-like stores during the sales season and it has achieved that target.


Lavina Rodrigues, marketing manager at Metro Shoes Ltd, which sells multi-brand footwear through 175 outlets across the country, said the company is yet to gauge the sales records for the two-day flat 50 per cent sale this year, but indications are it is same as July last year. She says Metro is generally able to sell almost 60 per cent of the old stocks during the sales periods. In some cities like Rajkot, where consumers are more receptive of the discount season, the company would get rid of almost 85 per cent of the old stuff.


Source: The Economic Times

Copyright © 2012, Bennett, Coleman & Co. Ltd. All Rights Reserved


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