Sale! Boon or bane?

Tias Chakraborty takes a closer look at the EOSS phe­nom­e­non and what it means for the re­tail in­dus­try.

Apparel - - Contents -

Cut-throat com­pe­ti­tion in the re­tail in­dus­try has forced brands, re­tail­ers and dis­trib­u­tors to re­vise their strate­gies from time to time. Even for a lo­cal de­part­men­tal store, it is no longer a sim­ple process of buy­ing from the dis­trib­u­tor and sell­ing it to the buyer. With more op­tions avail­able than ever, buy­ers are will­ing to in­vest time in or­der to save money. So, how does one cope? The End Of Sea­son Sale (EOSS) has been an old phe­nom­e­non in the re­tail in­dus­try that ap­pears in var­i­ous for­mats un­der var­i­ous names. The ‘Black Fri­day,’ though sin­is­ter sound­ing, is as im­por­tant a day in North Amer­ica as any other na­tional hol­i­day. In the ap­parel in­dus­try, till mid2000s, there would be a fixed pe­riod in a year when clear­ance sales took place. To­day, how­ever, things have changed and the sup­ply chain has evolved. Re­tail­ers can af­ford two or even three sale pe­ri­ods in a year. This means higher vol­umes, bet­ter vis­i­bil­ity and def­i­nitely greater foot­falls. Let us an­a­lyse whether this is a pos­i­tive or a neg­a­tive de­vel­op­ment for the in­dus­try and what it means for brands sell­ing their prod­ucts through brick-and-mor­tar and on­line re­tail­ers.

TWO SIDES, SAME COIN

When we start to fac­tor in the EOSS in an al­ready com­plex re­tail sce­nario, we can see that the neg­a­tives and pos­i­tives are bal­anced out. Let us start by analysing what it means for the aver­age re­tailer. A multi-brand re­tailer or a fran­chise store will of­ten have to de­pend on the EOSS to en­sure clear­ance of its stocks.

While they are glad that they are get­ting more foot­falls than ever and there is con­stant vol­ume in sales, there also lies the con­cern about cus­tomers only ap­proach­ing the place at the time of EOSS. This means, new launches and fresh col­lec­tions can barely lever­age these kind of foot­falls. It also means that the mar­gins are lesser but are com­pen­sated by higher vol­umes. Some re­tail­ers, how­ever, fac­tor in the sale, well in ad­vance, and set their mar­gins ac­cord­ingly. How­ever, it is the in­ten­sity of the com­pe­ti­tion that can de­ter­mine how much ex­tra one can re­ally take home. In­ter­est­ingly, there are equal num­ber of ad­vo­cates and crit­ics in the re­tail in­dus­try, of the EOSS phe­nom­e­non. Sa­tra­jit Das, Op­er­a­tions Head and Spokesper­son at Amantran Bazaar, Kolkata, ex­plains, “There are def­i­nite ad­van­tages of an EOSS be­cause it en­sures that your stocks are liq­ui­dated quickly. This means that you are pay­ing lesser in­sur­ance and can cre­ate bet­ter strate­gies with the help of the ex­tra space and time. I also think it is an ad­van­tage for cer­tain brands in the ap­parel cat­e­gory. An EOSS en­sures that col­lec­tions no older than one year are sold out since de­signs have a ten­dency to go out of vogue very quickly; brands can thus af­ford to bring out new col­lec­tions faster, with the pre­vi­ous lot cleared out of store shelves through the EOSS. How­ever, since the prod­ucts are sold at lower prices, the mar­gins might be slightly lesser.”

QUAN­TITY V/S QUAL­ITY

For re­tail­ers sell­ing niche prod­ucts such as de­signer clothes and high-end fabrics, there is al­ways the ques­tion of quan­tity vis-à-vis qual­ity. Since niche prod­ucts have higher mar­gins and lesser fre­quency of sales, it is of­ten dif­fi­cult to opt for EOSS as there could be a sce­nario where cus­tomers be­come used to the sale pe­riod prices and only pur­chase dur­ing that pe­riod. Also, price ex­pec­ta­tions from the brand that has a price point match­ing its tar­get au­di­ence may come down. This is a com­mon prob­lem in the e-com­merce space where the mar­gins are al­ready tight due to com­pe­ti­tion. For those sell­ing unique prod­ucts, the chal­lenge is greater while opt­ing for an EOSS. Sudhakar Sa­hoo, owner of Odisha Sa­ree Store, an on­line hand­loom re­tailer, says, “We have al­ways looked to give the best price to the cre­ator of the prod­uct. Un­for­tu­nately, most of the hand­loom own­ers in Odisha are poor and there­fore, we do not have the op­tion of get­ting low rates. There are charges of sell­ing it on­line and there is the lo­gis­tics as­pect, too. Our mar­gins are so tight that if we opt for an EOSS, we would be run­ning into losses. How­ever, there are strate­gies that can be worked out once the vol­ume prom­ise is good.”

THE CON­SUMERS’ POINT OF VIEW

It is a well-known fact that con­sumers make up their mind about what to buy when they head to the store and it is the

job of the re­tailer to en­sure that they buy more than what they have planned. In the case of an EOSS, most buy­ers, es­pe­cially the mid­dle class, ur­ban shop­per, plans ahead of the sale sea­son. Take for ex­am­ple, the EOSS that takes place right be­fore the Dusshera/Di­wali/Eid pe­riod in Oc­to­ber-Novem­ber. This is the most pro­duc­tive time for ap­parel re­tail in In­dia and this is mainly be­cause people are look­ing to buy in bulk, at a low cost. The EOSS serves as a ma­jor draw for the aver­age mid­dle class shop­per who is look­ing to af­ford high-end brands. For ex­am­ple, a shop­per look­ing for a shoe in the R1,800 to R2,200 range is more likely to go for a 40% off at Wood­land than Bata’s new ar­rival, con­sid­er­ing that both the stores are lo­cated con­ve­niently for the buyer.

STRATE­GIS­ING

A great deal of plan­ning goes in an EOSS from the re­tailer’s per­spec­tive. Nowa­days, on­line stores have also started giv­ing sea­sonal dis­counts that seem to take place through­out the year. This, in fact, makes the com­pe­ti­tion not only tougher but also more com­plex; con­sid­er­ing that the lengths of the sup­ply chains for these two cat­e­gories of re­tail­ers are dif­fer­ent. In the long run, the EOSS will be­come grander and the GOSF, smarter. And at the end of the day, there will be a larger num­ber of cus­tomers go­ing home with the com­fort­ing thought that they got a bet­ter deal at the store than their neigh­bours!

Newspapers in English

Newspapers from India

© PressReader. All rights reserved.