Business News

Early end-of-season sales start as businesses move inventory

Several lifestyle, apparel and footwearbrands have started mid-season and flash discounting, weeks before the usual end of season sales (EOSS) to clear unsold inventory after demand faltered over the past two months.

Historically, retailers launch EOSS by June end before fresh season merchandise hits their shelves. However, brands have now either started cutting prices or will initiate a sale period in the coming week.

“Based on the sales done in previous year, many retailers stocked items expecting similar momentum,” said Lalit Agarwal, chairman of hypermarket chain V-Mart. “But February onwards has been tough for the industry. Despite May showing some improvement, retailers have started discounting earlier than the normal schedule. For us, we had increased prices which impacted demand so we reduced the prices.”

Despite inflation, consumers flocked to shops for discretionary products last year, helping the market rebound strongly post pandemic. However, the market reached a point of spending exhaustion over the past few months when even premium products saw lower growth rates. The overall growth slowed down to 6% in both March and April, according to the Retailers Association of India, indicating the slowest sales expansion in more than 14 months.

“There has been a slowdown in the overall market and brands would ideally want to exhaust their current inventory before the fresh stock comes in July,” said Devarajan Iyer, CEO of fashion retailer Lifestyle.

Listed apparel retailers witnessed a 20%-30% top-line growth during the March quarter, aided by a favourable base. While formats catering to low-income consumers such as V-Mart and Pantaloons continued to be under pressure, Page Industries and Aditya Birla Fashion & Retail said there are early signs of a demand slowdown in the premium end as well.

“Our overall growth rate this quarter has got affected significantly across our segments. It has also resulted in higher inventory and higher debt,” said Ashish Dikshit, managing director, ABFRL. “This is probably the first full quarter where the impact of slowdown is fully visible across all segments of our business. I had earlier referred to the lower end of the market being more affected but now, it appears that it is a more widespread sort of slowdown in this period.”

Malls said discounting is also segment specific in some cases. For instance, retailers will have to implement quality control, including establishing testing laboratories and getting BIS licences among others by next month.

“Footwear retailers also want to clear inventory before the mandatory requirement of BIS,” said Ravinder Choudhary, vice-president at Unity Group that operates over a dozen malls in NCR and Punjab. “Retailers have also advanced their sales to compete with online retailers that are already offering discounting ahead of their mega sale.”



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