Clothing discounts, a mismatch between planned inventory and actual sales: Survey

27 February 2025, Mumbai

Nearly 40 per cent of discounted clothing products sold by Indian retailers are a result of mismatches between planned inventory and actual sales, indicates a survey conducted by the Vector Consulting Group in partnership with NielsenIQ.

Additionally, supply chain issues lead to 7-30 days delay in arrival of the merchandise, shortening the full-price selling window and forcing retailers to offer discounts.

Discounting is the biggest drain on margins, says Vishak Kumar, CEO, Aditya Birla Fashion and Retail-Lifestyle Business. His company aims to tighten and optimize its channel mix to reduce these price-offs, he informs.

Manual in-season stock adjustments, like inter-store transfers, prove slow and inefficient, emphasizes P Senthilkumar, Senior Partner, Victor Consulting Group. Long lead times of 6-9 months necessitate year-ahead collection planning, making accurate demand forecasting difficult and increasing the risk of unsold stock, he adds.

Brands are often forced to plan collections far in advance, leading to inventory mismatches and forecasting errors. Some popular items run out of stock, while others are overstocked, Sentilkumar explains. Supply chain delays and forecasting errors create significant operational and financial challenges, he adds.

Retailers reported a strong festive season followed by weak winter demand. Lalit Agarwal, Managing Director, V-Mart, notes, even though the company had planned inventory, but it had to offer more discounts to liquidate stock due to a poor season.

Brands are actively trying to reduce discounting to improve margins, especially in online channels. Arvind Fashions, for example, delayed discounting and skipped end-of-season sales due to strong full-price sales.

The company has closed underperforming stores and reduced discount-driven online growth, states Kulin Lalbhai, vice-chairman of Arvind Fashions. It has made a clear trade-off to remove low-quality growth from its business model, it adds.

Latest Fashion news