Jabong, Myntra, other e-tailers force Big Retail to discount early and deep

Jul 21 2014, 13:04 IST
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However, most stores launched their sales in early July; in the winter too, the sales had been advanced to late December. However, most stores launched their sales in early July; in the winter too, the sales had been advanced to late December.
SummaryE-commerce sites such as Jabong and Myntra are offering discounts of a flat 50%.

Apprehensive that attractive deals from e-tailers will lure customers away from them, brick-and-mortar retailers have kicked off their end-of-season sales earlier this time around with the deepest discounts ever. The year’s two end-of-season sales are typically held in January-February and then later from mid-July to end-August. However, most stores launched their sales in early July; in the winter too, the sales had been advanced to late December.

To ensure they get a look-in, starting discounts this time have been as high as up to 50% — and 50% flat over weekends — compared with up to 30% offered earlier. And given that these sales are now a key driver of footfalls and revenues, discounts could rise further to levels of 70% towards the end of the sale period.

Indeed, they have little choice given e-tailing sites such as Jabong and Myntra offering discounts of a flat 50% and a variety of deals to boot. Recalling how it all began during Diwali last year, when consumer spends were falling, Darshana Shah, senior vice-president, marketing and visual merchandising, HyperCity Retail, says these biannual sales are now key for the business. “With spends estimated to have fallen by 10-12% in the last festive season, we were compelled to drop prices and today these sales are a must,” asserts Shah.

Indeed the two sales together account for a good 40% of the annual revenues of retailers which is why they can’t afford not to participate. Sandip Tarkas, president, customer strategy, Future Group, confirms the steep discounts are luring consumers back to the stores. “They’re shopping once again and spends have gone up by about 15-20%,” he says, adding the lifestyle piece has seen a 15-20% rise in billings so far this season. Harkirat Singh, managing director, Woodland, told FE the rise in consumer spending since the last week of June is perceptible. “We started our sale the first week of July and since then have seen a 25% spike in billings,” Singh said.

While it’s evident that the completion from their online peers has pressured them into slashing prices, brick-and-mortar retailers aren’t willing to throw in the towel just yet. In their chase for volumes, however, they are forced to sacrifice margins; industry experts say margins drop to 15-20% during sales compared with 25-30% at other times. This is despite the fact that a part of the discount is being picked up by

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