The Early Bird's Catch: A premature end to the season's sales?
17 December 2024, Mumbai
The premature commencement of End of Season Sales (EOSS) has sparked concern among mall operators who rely on a revenue-sharing model with retailers. Traditionally, EOSS was a synchronized event where all brands within a mall would offer discounts simultaneously. This created a sense of urgency and excitement, drawing shoppers in droves. However, the rise of e-commerce and evolving consumer behavior has disrupted this pattern.
Why the early onset of EOSS
There are several reasons for the early EOSS trend. One main reason is the inventory glut. As e-commerce continues to disrupt the retail industry, brands often find themselves burdened with excess inventory. To liquidate stock and generate cash flow, they resort to early discounting. Moreover online retailers like Flipkart and Myntra have set the pace for early sales, forcing brick-and-mortar stores to follow suit to remain competitive. The unpredictability of weather patterns, especially during winter, has also led brands to hedge their bets by starting sales early. What’s more, the recent conclusion of Black Friday sales, characterized by deep discounts, has created a heightened expectation of promotional offers among consumers.
Indeed, early EOSS has an impact on retail segment, especially malls. There revenues are hit as early, staggered discounts can dilute the overall impact of EOSS, leading to lower footfall and reduced revenue for malls. Frequent discounting can condition consumers to expect lower prices, potentially devaluing brands in the long run. Inventory management is also a challenge. While early sales can help clear stock, they can also disrupt inventory planning for upcoming seasons. And most importantly, consumers might postpone purchases in anticipation of deeper discounts later in the season.
Early of EOSS is evident in the behavior of major retailers and brands. While some are optimistic about the potential revenue boost, others are cautious about the long-term consequences. Retailers for example look to boost sales by 8-12 per cent year-on-year in December and January through early EOSS. During the just-concluded Black Friday sales, several retailers and brands reported brisk sales due to heavy discounts on offer. This showcases the consumer appetite for discounts and its potential influence on EOSS timing. However, this strategy could lead to cannibalization of future sales. Consumers on the other hand are becoming more and more price-sensitive and are likely to wait for the best deals, which could further delay purchases.
Navigating the tangle
Therefore, to deal with the evolving retail landscape, brands and malls must adopt a strategic approach.
Synchronized sales events: Collaborating with other retailers to create synchronized sales events can generate excitement and drive footfall.
Personalized offers: Leveraging data analytics to offer personalized discounts can enhance customer experience and loyalty.
Omnichannel strategy: Integrating online and offline channels to provide seamless shopping experiences can attract a wider customer base.
Sustainable inventory management: Implementing efficient inventory management practices can reduce the need for frequent discounting.
The bottomline is the trend of early EOSS presents both challenges and opportunities for retailers and mall operators. While early discounts can boost sales and clear inventory, they can also disrupt the traditional shopping calendar and potentially impact long-term brand value. Finding the right balance between individual brand strategies and collective mall initiatives will be crucial in navigating this evolving landscape.
