Fashion retailers planning shorter end-of-season sales
In a rethink of strategy, fashion retailers are planning to shorten their end-of-season sales events as customers lose interest in buying products merely for discounts. A longer duration also doesn’t necessarily translate into higher sales, they say.
After demonetisation on 8 November, many branded apparel and lifestyle companies offered mid-season discounts that were to continue well into 2017 while also advancing their year-end sales to mid-December from end-December to boost flagging consumer sentiment.
But executives at K Raheja Corp.-owned Shoppers Stop Ltd, Dubai-based Landmark Group’s Max Fashion and Future Group’s Central are now planning to reduce the duration of their sales since consumers prefer to buy fresh stock.
Shoppers Stop reduced its last sale period by 12 days. It opened its sale at the end of December and wrapped it up by mid-February rather than end-February. The company plans to follow a similar strategy during its summer sale too, i.e. reduce the duration by a week or 10 days.
“From this season onwards, our understanding is that we need to change track. Customers come and shop for new range and service, not price,” Shoppers Stop managing director Govind Shrikhande said.
Value-fashion retailer Max’s end-of-season sale, which used to last for 24 days two years ago, ended in 20 days in December and will be cut further to 15 this summer.
“Over the next two years we want to bring it down to two weeks because customers are not really enthused by sales...They are very enthused on full price because our average price is around ₹500 and even at 25% off the customer ends up saving just ₹100 or so,” said executive director Vasanth Kumar.
Clearing inventory to make room for new stock is the main reason these retailers hold sales rather than to boost earnings. Revenue from end-of-season sales account for about 50% on average of a retailer’s total business during the quarter that a sale falls in.
Retail chain Central used to run its end-of-season sale for about six to seven weeks. Its last sale began during the last two days of December and ended on 31 January—lasting roughly four-and-a-half weeks. The philosophy going ahead will be ending sales quickly to focus on new fashion instead, according to the retailer’s marketing head, Jitendranath Patri.
“In the last four-five years there was a lot of e-commerce discounting going on. Suddenly the apparel and lifestyle category was becoming the mainstay of e-commerce companies, which were selling merchandise at (discounts) throughout the year,” said Ankur Bisen, senior vice-president, retail and consumer products at consulting firm Technopak. “That forced a lot of these big retailers to increase the length of sales or do more sales around the year and it was hurting their profitability. That realisation is now (happening) and retailers are saying we have to go back to our retailing strategy.”