As retail sales growth slow, retailers to cut deep discounts to drive profits
clothes, electronics and footwear that have been enticing shoppers to splurge may reduce significantly, as retailers including Aditya Birla Fashion and Retail (ABFRL), Arvind and V-Mart have ruled out deep discounts in a move to spur profits.
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Madura Fashion, which manages brands such as Louis Philippe, Van Heusen, Allen Solly and Peter England, said that during the second half of the previous fiscal, especially the fourth quarter, it managed to reduce discounts by 500 basis points to drive profitable growth.
«We also realised that we were quite alright on inventory and we didn't see much elasticity and in discounting,» Vishak Kumar, chief executive officer at Madura Fashion, told investors. «We kept that tight and that was part of the cost reduction efforts also.» In FY24, retail sales growth rate fell year-on-year every month, reflecting weak consumer sentiment across segments such as apparels, footwear and quick service restaurants (QSR). FY24's comparatively slower growth rate of 4-7% sustained this year as well, with April seeing a 4% increase, the Retailers Association of India (RAI) said after a survey of the country's top 100 retailers.
For the last year and a half, retailers have tried to counter slowing demand with constant discounting. But the price cuts haven't helped much.
Department store V-Mart, which operates in smaller towns, said it has shifted focus to internal capability, which is scalable, replicable and sustainable.
