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It’s raining discounts at apparel stores

With the recent sale season over, apparel retailers are still plagued by the high inventories they piled up over the last few quarters in an economic downturn.

business Updated: Jul 26, 2012 22:20 IST
Rachit Vats

With the recent sale season over, apparel retailers are still plagued by the high inventories they piled up over the last few quarters in an economic downturn.

Discounts to lure consumers have had a limited impact.

“Retailers are locked in a brick-and-mortar situation. Rentals are high and inventories are piling up,” said Arvind K Singhal, chairman, Technopak Advisors.

“Inflation is making a big dent in domestic earnings. Consumers are looking at more value based products and paying less premium, thus adversely affecting our margins,” he added.

“In the March quarter, retailers saw some relief, as they offered heavy discounts to get rid of high inventory. The next two months have eased some pressure, despite low consumer sentiment. You can expect inventory to come down by 5-10% for the quarter but it’s not enough. The impact will be seen in the June quarter results,” said an analyst.

Retailers refused to comment on the inventory pile-up and the steps taken to negate it. http://www.hindustantimes.com/Images/Popup/2012/7/27-07-biz-06.jpg

“The sale season has been good and helped bring new customers on board. The scale of sales has gone up recently as the entire industry does it at a go,” said Pawan Sardah, chief marketing officer at Future Group that owns Pantaloons and the Big Bazaar chain.

Shoppers Stop and Lifestyle expect to record a 10-15% annual surge in annual business from the sale season. Future Group too sees 20-25% of its overall revenue for its growing apparel business, Fashion Big Bazaar (FBB), come from this period.

FBB contributes 30% to Big Bazaar’s topline, which is about R7,350 crore for 2010-11(ending June 2011).