Why Offline Retailers in India Face an Uphill Battle With End-of-Season Sales Despite Giving Massive Discounts?

As retailers navigate the unpredictable market, the question arises: Will the discounted prices and extended sale period be enough to reinvigorate Indian consumers' interest and lead to a successful End-of-Season Sale (EOSS)?

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Retail is one of the fastest-growing sectors in India, particularly in the apparel category. Brands are leaving no stone unturned in their quest to lure customers by giving them jaw-dropping discounts and coupons. However, the buzz and excitement usually associated with end-of-season sales (EOSS) seem to have fizzled out this year as retailers express concerns over the lacklustre response.

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With offline businesses still lagging behind last year’s levels, retailers are now offering massive discounts of up to 75% and considering extending the sale period. As the clock ticks, the next few weeks become crucial for retailers who aim to clear their existing inventory before the arrival of new-season stock.

Retailers’ Worries Amid Lackluster Response From Customers

Breaking away from tradition, offline retailers this year have shaken up the game plan for end-of-season sales (EOSS). Instead of waiting until the end of June to kick-start the sales extravaganza, brands boldly launched their EOSS in mid-June. The sale is expected to extend its tempting grip until mid-July, providing an extended window of opportunity for eager shoppers to grab the hottest deals.

According to a recent report by ICICI Securities, retailers’ decision to offer higher discounts during EOSS reflects the underlying stress in their inventory. The analysis, which covered prominent brands like Shoppers Stop, Reliance Trends, Lifestyle, Pantaloons, VMART, Max, and Westside, indicates a concerning trend of inventory-related stress. The report reveals a year-on-year decline in revenue ranging from 5% to 15% during the April-May period. As a result, most brands have taken proactive measures by launching their EOSS a noteworthy two weeks earlier than usual. This strategic shift aims to compensate for the sluggish performance and breathe new life into their financials.

As retailers navigate the challenges posed by the current market conditions, their decision to offer higher discounts is a clear reflection of their commitment to managing inventory stress and revitalizing their business.

Anticipating a revenue surge during EOSS, retailers had hoped to reach 2022 levels, despite a sluggish period that started in February. In an effort to boost revenue, some brands initiated the sale early. However, Satyen Momaya, the CEO of French apparel brand Celio, noted that while momentum began building in late May due to the wedding season, sales are yet to match the previous year’s figures. Nevertheless, there is still an optimistic outlook as it is anticipated that during EOSS, sales may experience significant growth of up to 40%.

With weak revenue performance in the March quarter, apparel retailers now face a critical task of liquidating their inventory.

Devarajan Iyer, CEO of Lifestyle, emphasized the significance of the next two to three weeks, stating that the majority of brands have resorted to significant discounts to attract footfall and increase sales. Shoppers Stop leads the pack in offering aggressive discounts of up to 62%, while Reliance Trends, Lifestyle, and Pantaloons follow suit with discounts as high as 41%, 39%, and 25%, respectively.

However, it’s worth noting that private-label retailers such as Westside, Max, and VMART have opted for a different approach. They have adhered to a strict discounting-window policy and refrained from participating in the early EOSS.

The competitive landscape is shaping up as retailers employ various strategies to capture consumer attention and encourage footfall during this crucial period of the sales season.

Factors Contributing to Low Demand for End-of-Season Sales

Unmatched pent-up demand: Last year’s record-breaking sales were exceptional due to pent-up demand resulting from the Covid-19 pandemic restrictions. However, this year, the same level of pent-up demand has not been observed, leading to a slower response from customers.

Shorter Wedding Season: The year 2023 is known for shorter wedding season, resulting in low demands of appreal and other products. The sales are expected to remain slow due to below-than expected number of weddings taking place.

Unfavourable weather conditions: The occurrence of unfavourable weather, such as rain, has disrupted weekend shopping plans, particularly in cities like Delhi and Mumbai. This has deterred customers from venturing out of their homes to shop and has negatively impacted footfall and sales.

Reluctance to face traffic: The reluctance of customers to face the hassle of traffic has also played a role in the sluggish response. With congested roads and potential delays, customers have been more hesitant to visit physical stores, leading to decreased footfall.

Economic concerns: Uncertain economic conditions, such as impending recession, and rising inflation, may be causing some customers to hold back on discretionary spending, affecting their participation in the sale events.

Shift to online shopping: The increasing popularity of online shopping platforms has diverted some customers from physical stores during EOSS, affecting foot traffic.

These factors emphasize the additional hurdles that retailers must overcome in order to stimulate footfall and boost sales during this critical period.

As retailers navigate the unpredictable market, the question arises: Will the discounted prices and extended sale period be enough to reinvigorate consumer interest and lead to a successful End-of-Season Sale (EOSS)?

The Power of Collective Sales

In the fast-paced world of retail, innovation and collaboration have become key drivers of success. Therefore, mall operators are now advocating for brands to collaborate and simultaneously kick off their sales/discounts. This strategy aims to create a collective momentum that benefits both retailers and customers.

Muhammad Ali, CEO of Forum Malls of the Bengaluru-based Prestige Group, suggests that Indian retailers should take inspiration from Dubai’s sale strategy to enhance footfall and boost their efforts. Aligning all brands on sale simultaneously allows customers seeking discounts to find their desired items conveniently. Additionally, a timely conclusion of the sale caters to customers interested in fresh stock, ensuring a smooth transition between the end-of-season offers and the arrival of new merchandise.

The collaborative efforts of brands and mall operators create a win-win situation, generating increased footfall, customer satisfaction, and overall sales performance.

Several lifestyle, apparel, and footwear brands have taken unconventional measures, initiating mid-season and flash discounting well before the customary EOSS, all in an effort to clear unsold inventory after experiencing dwindling demand over the past two months.

It will be interesting to see how retailers will strategize to entice Indian customers to drive footfall during the extended End of Season Sale in 2023. Are there any emerging trends or shifts in consumer behaviour that retailers should consider when planning their EOSS strategies? Let us know in the comment section!


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