Spending on the high street has never been cheaper for such a long period. If you walk through the city’s Linking Road that houses showrooms of some of the world’s biggest brands, it’s almost a surreal experience: be it Mango, Vero Moda, Jack & Jones, or shoe brand Aldo — all these premium retailers are literally shouting from their rooftops that they are offering up to 70 per cent discounts. Designer wear Mogra has gone one up and is offering up to 80 per cent “sale”.
“At this rate, I won’t be surprised if they go up to 100 per cent discount one day,” quips Vinita Chandran, a regular shopper.
Welcome to the Great Indian Discount Bazaar — something no retailer likes but nobody can do without, as a dull Diwali and poor offtake in the following months have forced brands to dole out more for less.
Value retailers, as low-cost brands like to refer themselves to, are also feeling the pinch, as the raison d’etre of their business is now being hijacked by bigger players.
Vasant Kumar, executive director of Landmark group’s value retail chain, Max, was worried during the end of the season sale, as many brands offered up to 80 per cent discounts and shoppers flocked stores to buy goods on discount.
“We could not offer such discounts because of our margin structures,” Kumar says. To woo customers, Max lowered its sale prices from Rs 399 to Rs 299 and played its value card to compete with big brands. “There was no meaning of 20 to 30 per cent discount when big ones were giving flat 50 to 60 per cent discounts. So, we lowered our sale prices and said our prices are still lower when others gave steep discounts,” he says.
Kumar is bang on. While French menswear brand Daniel Hechter offered a flat 60 per cent discount to shoppers for two days, apparel chain Bombay High was offering ‘buy two get two free’. Apparel retailer Provogue went for a flat 50 per cent off over the Republic Day weekend and is now offering a flat 40 per cent off.
Experts say the ‘sale tsunami’ was bound to happen. “There was a double impact — the like-to-like sales growth was below par and new stores could not be opened as planned...So, they have more inventories to get rid of,” says Devangshu Dutta, chief executive of retail consultancy Third Eyesight. Like-to-like sales refer to sales coming from stores in the business for more than a year.
Besides steep discounts, brands are also keeping higher amount of inventory in the discount basket, say industry experts.
“If brands were keeping 30 to 35 per cent of their merchandise on sale, now, we are seeing 60 to 70 per cent of their goods on discount. We are also seeing brands going for flat 50 per cent discount rather than up to 50 per cent,” says Kumar of Max.
If that was not enough, many malls such as Raheja-owned Inorbit, Oberoi Mall run by Oberoi Realty and Kishore Biyani’s Central came out with shopping events, wherein 50 to 100 brands offered a flat 50 per cent discount.
It’s no surprise that many in the industry are not happy with the steep discounts brands are offering. “I think retailers are overdoing discounts. By giving 70 per cent discounts every other season, they are killing the full price purchases. They are sensitising the customer to wait for the next season and do not buy full-priced product,” says Jaydeep Shetty, founder and chief executive of apparel brand Mineral. “When sales end in February, March will be an empty month for brands, as customers exhaust money to shop,” Shetty adds.
Says Govind Shrikhande, managing director of Shoppers Stop, which offers customers up to 51 per cent discount: “We do not believe in this (steep discount). It is tough and it is a race to the bottom.”
But will brands be able to sustain such discounts? “I think brands believe it is better to liquidate stock at higher discounts than cash getting stuck in merchandise,” says Dutta of Third Eyesight.
The inventory issue came to the fore when many brands advanced their end-of-season sale by a few weeks to clear their inventories before the next season kicks in.
Though brands normally start their end-of-season sale after January 15, this time they came out with the sale from the third week of December.
For instance, Mango started its sale from December 22, while Aldo started beginning this month. German brand Esprit also advanced its end-of-season sale by a fortnight to December 31. Spanish brand Zara started its sale from early January.
“Some retailers started their sales from the Xmas weekend and advanced sales by two to three weeks. It is obvious they wanted to have more top line,” says Nirzar Jain, vice-president of Oberoi Mall in Mumbai.
Adds Kumar of Max: “There was a drop in demand in September and October. Hence, brands decided to go early and get rid of inventory.”
Some brands have also extended their sales to shore up top line. French menswear retailer Celio, which has a joint venture with the Future group, is on a sale for almost one-and-a-half months till February 14.
Normally, these brands have their end-of-season for a month. Steve Madden, an international shoe brand, which started sale from this month, has extended its sale by another week.
