industry

Discretionary items' Republic Day sale parade marches on


Marketers are offering big discounts on discretionary products – from snacks and body spray to television and apparel – across platforms, as they look to liquidate inventory after a slide in sales since the past three weeks amid rising Covid-19 cases and local restrictions.

Average discount on most discretionary categories is 10-20% higher than the same period last year, reaching up to 70-80% for some products at leading retail chains and ecommerce sites, according to manufacturers, retailers and ecommerce firms.

“Discounting is completely dependent on the stock position each retailer has, but we see offers to be a tad higher compared to a year ago,” said Devarajan Iyer, chief executive of departmental store chain Lifestyle International.

stores

Several chains and platforms have advanced their Republic Day sales and extended them beyond the usual two to three days to liquidate inventory.

Industry executives said sales of packaged snacks, cold drinks, juices, body spray, colour cosmetics, television sets, refrigerators, washing machines and apparel have been down by 30-60% since the start of January.

Footfall at stores and malls has fallen 50-60% from December amid high Covid-19 infections and restrictions such as weekend and night curfew and early closure hours in several states, they said.

Strategy may Pay Off

“Since we have weekend restrictions in a few markets, retailers are hoping to bring higher footfall on weekdays, which reflects an extended period of sale,” Iyer said.

It seems to be working in some markets. After a sharp drop in footfall in the first two weeks of January, malls and the high street in Mumbai and Delhi-NCR have seen a slight increase in sales in the past few days.

“We expect retailers to be more aggressive during the Republic Day sale starting next week given that end-of-season sales were not very strong due to restrictions,” said Mukesh Kumar, chief executive of Mumbai’s Infiniti Mall.

Rating agency Icra, meanwhile, warned that an inability to clear out excess stock could result in higher borrowings or depletion in cash balances for some retailers in January-March.

“With restrictions on mobility, retailers face a great risk of inventory markdowns and they are expected to resort to higher levels of discounting to attract customers,” said Sakshi Suneja, assistant vice president at Icra.

A senior executive at a leading ecommerce marketplace said average discounts offered by sellers and brands on electronics, smartphones, apparel and general merchandise in the ongoing Republic Day sales are higher than last year.

Sales of out-of-home categories have dipped as office workers and students have returned to work and study from home.

Promotions Galore

In food and grocery, retailers and ecommerce platforms including Reliance Retail, Big Bazaar, Spencer’s Retail, JioMart, BigBasket, Amazon and Flipkart have been running promotions and schemes.

Mayank Shah, senior category head at the country’s largest biscuit manufacturer Parle Products, said footfalls have taken a hit in modern retail stores, which is why discounts are high on several products.

Several brick-and-mortar retailers are also running promotions in their ecommerce apps to compensate for the loss in footfalls and store business. “We have pivoted fast to omni-channel,” said Devendra Chawla, managing director of Spencer’s Retail and Nature’s Basket, adding that their online sales have increased 6-7 times from pre-pandemic levels on an average.



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