MUMBAI: Diwali is over and it is time for retailers, brand owners and consumers to take a reality check on the market and economic conditions.
In some cases, this has already been done, particularly in apparel.
Retailers have discovered that their apparel sales weren’t as good as expected and
anticipate a further fall in demand. So, they are planning cuts in further purchase orders or completely postponing new orders.
Apparel manufacturers have realised that they have been left with a lot of merchandise unsold and need to liquidate this inventory at the earliest.
Prima facie, therefore, the consumer appears to be in luck. The situation means she will get more discounts and promotional offers in the days to come.
The managing director of a discount format retail chain said on condition of anonymity, “Lots of high-end brand manufacturing companies are sitting on huge stocks which they are finding to sell. Usually, they make presentations to retailer in November for new purchase orders. But this time, since retailers haven’t shown much interest, the process has been postponed to January.”
Diwali wasn’t as great as expected in terms of consumers buying apparel and so retailers still have enough stock to take them through the next few months. Plus, they have to deal with orders that have already been placed.
Arvind Singhal, chairman of management consulting firm KSA Technopak India, said, “Sales have definitely come down, so there would be some amount of inventory pile-up. Though confirmed orders will take place, retailers will reduce the quantity they go for. From 30% growth, brands are seeing much lesser currently.”
The marketing head of a big lifestyle retailer conceded as much. “Yes, there is an issue of inventory pile-up. Right now, trends are not looking positive and the next 2-3 months are not expected to be good for this segment. In anticipation of that, some brands are already running offers across stores to liquidate inventory,” he said on condition of anonymity.
The top official of a discount retailer said there is suddenly a huge supply of branded apparel, unlike earlier, when getting stock from brands was a little difficult. “This shows that they definitely have huge amounts of merchandise to deal with.”
Many, however, would still have us believe inventory is not a problem.
D P S Kohli, chairman, Koutons Retail, said, “There is definitely a fall in consumer spending. People are not spending lavishly now. But inventory build-up is not much as we have made necessary arrangements.”
Nikhil Chaturvedi, managing director, Provogue India, said, “I can’t deny that the problem is not there. But since our number of stores is growing, we have been doing alright. The market is definitely trading down.”
KSA Technopak’s Singhal suggests the brands get rid of stocks through discounts and special promotions as soon as possible.
As if on cue, promotion sales, discount offers and gift vouchers have started becoming visible already, a phenomenon unusual at this time of the year.
Indeed, in a particular multi-brand outlet, as much as 60% of the brands were found to be under some sort of promotional offer to woo consumers who are either restraining themselves from shopping or downgrading to mass brands and unbranded apparels.
Hear that, shoppers?
s_tanvi@dnaindia.net
