Retailers move away from heavy discounts, as consumers become more discerning
24 March 2023, Mumbai
Indian retail chains are planning to reduce their discounts to pre-Covid levels, according to industry executives. Aditya Birla Fashion and Retail has already brought discounts back to pre-Covid levels and aims to reduce them further. Other retailers, such as Lifestyle International, have also reported reductions in discounts across categories, although some brands with high inventory levels still offer high levels of discounts.
The reduction in discounts is expected to improve retailers' margins at a time when fixed costs such as rentals are increasing. The recovery in demand and sales growth over the last two to three quarters has led to the decision to dial back discounts.
The Covid-19 pandemic had a significant impact on the retail industry in India, with many retailers offering higher discounts to clear out inventory and maintain cash flow. However, as the economy has started to recover and demand for products has increased, retailers are now looking to reduce discounts and improve their profit margins.
The reduction in discounts may also be a reflection of the changing consumer behavior in India. As the country becomes more affluent, consumers are becoming more discerning and are willing to pay a premium for quality products and services.
This trend is reflected in the rise of premium retail brands in the country, as well as the growth of e-commerce platforms that offer premium products and services.
