Homegrown apparel brands in the deep discounting category have been experiencing a few hiccups in the last six months.
Players such as Koutons, Cantabil, TNG, TQS have been hit by a combination of factors such as imposition of excise duty, inflation and a rise in raw material prices. And dipping sales are forcing these companies to rework strategies, including lowering discounts.
"There has been a 20-30% decrease in sales not just for us but all discount formats. We are in a dilemma since we cannot raise prices and it's not possible to offer more discount tolure in customers. We will bring down the discount from 80% to 65%," said Vijay Bansal, CMD, Cantabil Retail India.
To counter the dipping sales, the Cantabil is also looking to launch another brand - Kaneston - to be sold at net price. The company, which shut 120 stores last year, is going slow on expansion plans. At present, it has 330 stores. While Cantabil's flagship products are sold in the range of Rs 600-1,000 after discounts, the new brand will be sold in the Rs 1,100- 2,000 range.
"We need to wait for the consumer to adjust to the new structure before going ahead with any expansion plan. It will take at least four months for the consumers to realise that even without discounts the deals with us are the best," said Sunil Jindal, director, TQS.
The companies are also looking at ways to re-balance themselves. Companies such as Spykar and Koutons are eyeing various options to raise cash, including selling assets, sources said.
Koutons Retail, on the other hand, has closed down more than 350 stores and is offering higher discounts to check losses.
"Deep discount brands don't have a proper organised model. There is no standard deep discount brand in India at the moment. The model remains successful as long as it creates an aspirational value with the brand," said Nitin Kasliwal, vice-chairman and managing director, S Kumars Nationwide.