In the first webinar organized by DFU Publications-DFU LIVE in association with CMAI on the theme: ‘Inventory Udao and Cash Flow Badao’, experts rejected the idea of deep discounting to clear inventories.
They all agreed and highlighted deep discounting to clear inventory is not the right way forward even though COVID-19 has left the industry stuck with piles of inventory at various stages of manufacturing, distribution and retail.
The panel pointed out since the lockdown was announced across the nation just before the summer season’s fresh retail sale was due to start, consumers have not seen the S/S’ 20 collection anywhere yet. Whenever stores open, the inventory will be fresh in every respect. “Everything is fresh inventory, they came to stores in the month of March and customers have not yet seen them. The good part is, in India summers last till September, so we have quite a few months in hand, so there is no reason why the inventory should be cleared with discounts,” observed Rakesh Biyani, JMD, Future Group and President CMAI.
The panel felt since the lockdown is being lifted in a staggered manner with numerous conditions, new manufacturing will start at a slow pace. In the absence of any pressure for the arrival of fresh merchandize, brands and retailers should patiently push fresh retail sales through various points of sale. Moreover, with festive season being late this year, it gives enough time to clear summer merchandize. “The good part is, this time we have a late festive season, Dussera is in October end and Diwali by mid-November. In India, festivity typically leads to consumption” Biyani explained.
Earlier talking about deep discounting Sandeep Jain, Executive Director, Monte Carlo opined “Deep discount diminishes brand image, brand value, while MRPs become meaningless for customers and they stop valuing the brand. Ultimately, deep discounting ruins your bottomline.” All experts shared the same opinion that deep discounting is not needed in the present scenario. In regular business too deep discounting should be avoided. “Because of deep discounting practices, we brands are not sure what will be finally the value loss because of discounts. And we need to inflate our prices to cover this value loss.” argued Hemant Jain, Director, KKCL, owners of brands like Killer, Lawman, Easies and Integriti. Jain further recommended the industry should come on the same platform to guard against deep discounting strategies, which affect business and profitability of companies that is very critical for growth.
Concluding on deep discounting aspect, Rahul Mehta, Chief Mentor, CMAI added, “Discounting helps but deep discounting in this situation, is not recommended. However, it may seem like a quick solution but this may damage our brand’s image heavily.”
Rahul Mehta, however suggested that as regularly the industry sells discounted goods through e-commerce, we could continue doing so, as discounts anyway is expected from e-commerce, but not for the SS 20 range, as everybody agrees, the range has not been seen by the consumer and we have sufficient time in hand to sell till autumn, so we should present the collection only as a fresh collection. “I would also say that brands should rationalise pricing instead of inflating price on the assumption of discounting, as the customer may buy looking at fresh collection, rightly priced and we may avoid deep discounting” recommended Mehta.
Sandeep Seksaria, JMD, JG Hosiery, owners of brands Amul and Macho, suggested retailers need to work with very smart techniques to address the problem, while they should concentrate on fast moving items but they should look forward to stock small quantities and quick replenishments.
“We all have a lot of inventory at various stages, in retail as well as in manufacturing and of course it is going to be a challenge to manage that inventory but as everybody agrees, we shouldn’t be going at all for discounting, rather we should wait as customer will always need basic items,” says Lalit Agarwal, CMD V-Mart chain of stores. He believes, we will all have to learn to work in the changed scenario, “Obviously in the changed scenario, customer would want value, as everybody has to survive with less things be it food or clothing, so do we have to manage to live with less inventory too, plan without getting overly hassled,” he added.
Ramesh Poddar, CMD Siyaram shared his guru mantra, while wrapping up the webinar, “This is obviously a very tough time and an unusual situation for every company not only in India but across the world. We should be prepared to bear with this kind of uncertain situation. Everyone may suffer and we all should try to deal with the situation patiently.” He said, the unusual situation calls for coming together of all supply chain partners, “Right from the top end of the pyramid, with the entire supply chain partner at the top and retailers at the bottom of the pyramid, it is time to collaborate and work together. Every time adversity is followed with a boom time, so we should use this opportunity to think and mull over all our working and try to understand how it can be improved during this lockdown.”
He went on to say, “The garment industry for the last two to three years was passing through low phase, we should not further get into discount mode, as that will cause further losses. However, due to the lockdown, with all marriages getting postponed to coincide with festive season, the season will definitely help in the industry bouncing back,” he concluded optimistically.
The webinar was conducted on May 1, 2020 and got a huge response with 3,316 registerations and an attendee list of around 1,800 through zoom and Facebook live streaming.