Indian Republic Day Sales: Retailers on new high

Wednesday, 01 February 2012
Even though recent reports by Deloitte Touche Tohmatsu and Stores Media, suggest that retail outlook for India in the short term is a bit cloudy. Yet Indian retailers are a cheerful lot. As their continuous efforts to woo the customers back to store are paying off. The ongoing end of season sales, freebies and schemes are pulling shoppers back to the malls. And they are purchasing everything from food and furnishings to crockery and clothing. The sudden movement at these stores has raised hopes of a positive demand over the next six months.

Last week during the Republic Day sale period, India’s largest retailer Future Group registered its highest weekly sales. And others such as department store chain Lifestyle and footwear maker Woodland also reported high sales growth as heavy discounts wooed retailers after a long dull year that kept customers away even during the festive season.

Future Group reported national combined retail sales of Rs 650 crores between Monday and Sunday (January 23-29), which is 25-30 per cent higher than last year, as its 210 Big Bazaar and Food Bazaar outlets ran the ‘Sabse Saste 5 Din’ promotional campaign. Its apparel and home products chain Central offered a flat 50 per cent discount on 100 brands. Even Lifestyle International, which operates Lifestyle and Max department chains experienced sales growth, both year-on-year and sequentially. Lifestyle increased discounts to 50 per cent on Republic Day weekend from 40 per cent end-of-season sales. Woodland too posted 22-25 per cent growth in the end-of-season sales period on the back of severe cold this year, resulting in high-value jackets and sweaters flying off shelves in the discount period.

Republic Day sales are part of the end-of-season sales, and usually extend across four weekends starting from mid-January. This year, several retailers, including Lifestyle and Spencer’s Retail, advanced the sale to get rid of the piled up inventories. So does the growth in sales signal a revival of the sluggish retail sector? Analysts are sceptical. They feel that this could be a momentary high driven by discounts and does not indicate revival in consumer buying sentiment that was negatively affected due to the slowing economy, high inflation and consistent increase in interest rates for almost two years. Such a huge impact will definitely take time to melt away and till then retailers will have to stick to the discounts and promotional offers to keep the sales registers ringing.

Meanwhile, the industry is looking to a political consensus over allowing 51 per cent FDI in multi-brand retail along with private equity funding, which is expected to fuel growth. With ratings agency Fitch predicting a stable outlook to the retail sector for this year, riding on sales growth-driven expansion and efficient working capital management, retailers can only hope for better days ahead…

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