BENGALURU | NEW DELHI: Fast fashion appears to have been slow in riding out last quarter’s demonetisation: For the first time in six years, the customary end-of-season sale at Zara, Mango and Marks and Spencer has meandered way past its traditional deadlines – without emptying the shelves.
Low consumer confidence in the aftermath of the November 8 currency swap announcement has prevented brands from liquidating last season’s stocks as, analysts say, even discounts of up to 70 per cent don’t seem to be enough to bring back buyers of Zara’s jackets or Van Heusen apparel. Promotions, cashbacks and discounts by brands such as Marks and Spencer, Tommy Hilfiger, Pepe Jeans and Superdry did not seem to have lured enough consumers, stretching the discount season that typically lasts about six weeks by at least a month, said industry executives and retailers.
“This time, stocks have piled up because of demonetisation and brands that still have inventory left are on sale,” said Suresh Sungaravelu, executive director of retail, Prestige Estates, which operates Forum malls in south India and Bengaluru’s luxury UB City mall. “Usually, the trend is that the inventory of the coming season is decided according to the performance in the previous years.”
This time, sales should get over by next week, around Holi. Usually, retailers stock up for the new season by Valentine’s Day, February 14.
While India’s third-quarter economic output data did not point to an aggregate slowdown in the third quarter, several chief executives of global consumer companies said the government’s decision to overnight restrict the use of Rs 500 and Rs 1,000 bills affected purchasing power and temporarily hit sales of products such as cookies and aerated drinks.
This is the first such extension by the fashion industry since 2011, when an excise duty increase on branded apparel in that year’s budget prompted prices on such products to jump by 15 per cent, leaving retailers with high inventories. Before 2011, sales had an extended run in 2008-9 in the aftermath of the global financial crisis.
To counter dipping consumer confidence, fashion brands offered buyers discounts anywhere between 40 per cent and 70 per cent until February end, and some of the offers are still valid. Spain’s Zara, for instance, generally goes into fully new merchandise weeks before March, but this year various items from men’s shirts to women’s winter wear were still on sale until last week. Furry women’s jackets, for instance, with an original price tag of Rs 7,990 were available at a 50 per cent discount for Rs 3,990.
Zara’s UK rival, Marks & Spencer, too is still offering 40 per cent less on the purchase of a second shirt. At Nine West, women’s bags were being sold at a 50 per cent discount, while Hush Puppies’ shoes had a similar price cut. At Mango and Accessorize, discounts were as high as 70 per cent. Discounts were also prominently displayed by various other brands, including the lingerie label La Senza and apparel brand Voi Jeans.
A store executive at Van Heusen in Bengaluru said the retailer ended the sale season only on February 28, until when the brand offered 40 per cent discounts on the purchase of two shirts or trousers and 50 per cent on shoes. He said the sale usually ends by January end or February first week. “Some of the items of our old stock that didn’t sell are now available on the company site,” he added.
SPRING/SUMMER BUSINESS MAY TAKE A HIT
Madura Garments, which has People, Van Heusen, Louis Phillipe and Allen Solly under its umbrella, declined to comment on discount-related queries.
“Except for some brands, most are yet to move into the full new season collection in every store. Various brands have moved merchandise from high visibility stores to more secondary markets,” said the chief executive of a global apparels brand. “For most of the brands, 100 per cent new season collection in every store hasn’t happened. Otherwise, Valentine’s Day is typically the cutoff to fully move into the new Spring/Summer collection.”
He also said that the spillover could affect business in the spring/summer season. “If you have not done it yet, then obviously you will see a slower lift-off into the new season,” he said, referring to new stocks at stores.
Other brands such as H&M and People have already started giving promotions on their new season stock, replicating round-the-year offers by online fashion shops such as Myntra and Jabong. While H&M has started 50 per cent discounts on the second denim trousers, shorts and dungarees, People is offering ‘buy-three-get-two-free’ offer across all categories.