End-Of-Season Sale: Higher The Inventory, Steeper The Discounts

Several apparel, electronics and footwear brands are advancing their end-of-season sale with hefty discounts, reflecting stress caused by underlying inventory.

Myntra to Shoppers Stop have kicked off sales this year around two weeks earlier than usual, with discounts ranging from 40–90% across offline and online channels.

"Several big brands are stuck with inventories, especially because of wrong bets taken on de-growing categories, hurting bottom lines," according to Avneet Singh Marwah, chief executive of Super Plastronics Pvt., an exclusive brand licencee of brands including Thomson, Kodak and Blaupunkt in India. While Thomson is currently out of stock, he said the company is stuck with excess stocks of other brands that was have become "sale-only brands" as they chase top line.

The steep discounts indicate the health of consumption, which forms around 60% of the gross domestic product, among value-conscious buyers. It follows a lackluster festive season as consumers, grappling with sticky inflation, spend less enthusiastically on discretionary goods. While the economy is growing faster than large global peers, demand is driven by the affluent as India sees a K-shaped recovery.

For most part of the year, consumer spending has remained muted due to wide-ranging headwinds such as inflation, abnormal weather, low wages and high personal indebtedness. The mid-season sale in June also began early this year as retailers rushed to clear unsold inventory.

However, the companies are betting on a mix of products and promotions to reverse the trend and aid the bottom line.

Marketing mailers and store checks by NDTV Profit showed that Tata CLiQ is offering 30–85% discounts on a wide range of categories, including apparel, jewellery, home furnishing and gadgets.

Shoppers Stop is offering up to 50% discounts across 800 brands, ranging from Allen Solly to Puma, from Dec. 12. Other brands like Raymond, Levi's, Woodland, and TCNS Clothing-owned brands like Aurelia and W are offering of 40–60%.

E-tailers like Amazon, Ajio and Myntra have also begun their sales event. In Flipkart's year-end sale, smartphones from brands like Apple, Samsung, Realme and Motorola will see price cuts and appliances will see up to 75% discount other than no-cost EMI, cashback and exchange offers.

Myntra is running its flagship 'End of Reason Sale' sale. Though the tagline is different from brick-and-mortar stores, the motive is the same: it wants consumers to shop with just a reason, however silly the reasons might be.

"It's time to welcome the biggest celebration this holiday season," Gopal Asthana, chief executive officer of Tata CLiQ, said, hoping to lure inflation wary shoppers with "irresistible deals" and a promise of "incredible savings".

Categories like apparel have seen sluggish sales in the festive months of October and November. Retailers expect sales in December, which also coincides with the wedding season and the beginning of winter, to help meet their revenue target for the third quarter. The three months are a barometer of the spending prowess of consumers and is critical for retailers also, accounting for 35% of their annual sales.

Electronics and appliance retailers are preparing for the end-of-season sale that can make them profitable for an entire year. The third quarter is extremely crucial, particularly after a blowout summer this year, with some companies labelling it as the "worst summer" in several years.

Companies say that while consumption at the higher end remains strong, it's yet to pick up among value-conscious consumers, underscoring the K-shaped recovery-in Indian economy. Sales of premium televisions and washing machines were robust, but there is still unsold stock of mass-market products.