Retailers shift away from heavy online discounting to boost sales
Major Indian retailers like Shoppers Stop, Arvind Fashions, Aditya Birla Fashion and Retail, and Lifestyle are shifting away from heavy online discounting. This strategic change follows their struggle to boost online sales despite frequent promotions, including end-of-season and holiday sales.
Moving away from the highly competitive online market, retailers are now focusing on brick-and-mortar stores for sustainable growth, states Devarajan Iyer, CEO, Lifestyle International While this helps improve in-store sales, online sales continue to lag due to customer expectations of discounts, he adds.
Retailers faced a two-year sales slowdown due to inflation and financial pressures. The rise of discount-driven digital-first brands further challenged established retailers, forcing them to lower prices, notes Biju Kassim, CEO, Shoppers Stop.
Despite retailers reducing their discounts, online marketplaces are reportedly cutting their margins and offering additional discounts, especially during sales periods. This raises concerns about compliance with e-commerce FDI rules, which restrict marketplaces from influencing selling prices.
Brands like Lacoste India maintain control over their discounting, limiting it to specific events like end-of-season sales. However, online platforms are selling below purchase prices, investing in brands themselves, which poses a significant problem, points out Neetu Kashiramka, Managing Director, VIP Industries.
Accounting for over a third of discounted apparel sales, inventory mismatches are being addressed by retailers through improved inventory management. There is a shift towards a lesser discounts, more profitable growth path in e-commerce, emphasizes Ashish Dikshit, Managing Director, Aditya Birla Fashion & Retail.
