Economic recession coupled with weak winter season in north India has forced retailers across brands to extend discounts for prolonged period this year.
The winter sales that usually start in the second week of February is already in its 3rd week and the companies expect it to go on till March.
Retailers like, Koutons, Big Bazar, Spencer’s, Reliance and Vishal Retail are offering discounts in the range of 40 to 70 per cent to their customers.
“The footfalls have dropped by 10-15 per cent this season. Last year, we came out with winter sales in the month of February but this year our sale has started 3 weeks in advance,” said Balvinder Singh Ahluwalia, marketing president, Koutons Retail.
Retailers are saddled with a large inventory and have launched all-out efforts to clear it before the year ends. “These are desperate measures to cover the interest cost in holding on to the inventory. The top line of the retailers was already suffering due to lower sales, but now even the bottom line is likely to be impacted more than the previous estimates,” said a retail analyst.
The winter wear market is estimated to be worth Rs 1,500 crore. The sale of winter wears depend highly on the climate conditions of the northern parts of India. Already, the growth of organised retail has dropped to 15 per cent in 2008, compared with 25 per cent in 2007, industry experts say.
Vishal Retail, a New Delhi-based retailer, has an inventory of Rs 813 crore and plans to sell its winter collection at even below purchase-price. “Apparel inventory accounts for 60-65 per cent of our total inventory. We are hopeful of clearing our inventory by the end of March as we have started our winter sales much in advance this year,” said Ambeek Khemka, president, Vishal Retail.
According to analysts, “Times have changed and even discount offers cannot assure the desired sales. Even though, Future Group is doing much better than most of the other retailers, the next quarter would be much more difficult to drive sales growth.”