Retailers like Big Bazaar, Lifestyle and Marks & Spence offer discounts as growth slows this year

NEW DELHI: Just like an unusual April in Delhi when temperatures remained below 40-degress, retailers are dishing out discounts and special offers to attract buyers in early summer. From Future group's Big Bazaar to Lifestyle and Marks & Spencer, almost all retailers are courting buyers through special offers as growth remained muted in March and April. With the overall economy looking weak, customers are tightening their purse strings amid low increments.

Big Bazaar just concluded its first-ever public holiday sales, while Marks & Spencer is offering 30% discount to liquidate stocks. Ditto for FMCG major Godrej that has announced offers for its furniture brand. Woodland says it has intensified its promotional activities, Lifestyle Retail is offering discounts and freebies and Shoppers Stop is offering higher rewards.

Although retailers are choosing not to talk at the moment, numbers point to slower offtake. For instance, Shoppers Stop, which reported an 87% decline in fourth quarter net profit, has seen a 3% rise in transaction size, despite the average selling price going up 9%. Even conversion rate is down 5% despite footfalls rising 29% during the fourth quarter.


Spencer's Retail says its same store sales growth has moderated from 12-13% during 2011 to around 8% during January-March 2012. Same store sales is a measure used to gauge how sales have been in stores that were operational in the previous year.

While brands are aiming to revive buying sentiments, for some the offers are intended to make up for the backlog from the last season. A store manager at a Pantaloon Retail outlet in Delhi said while it had increased prices by 12% last year, in some cases the company has been forced to slash prices by around 20% to boost sales.

"Buyers are waiting for the sale period to make purchases as things have become more expensive. We have to offer some incentives to retain customers even though our profit margins have reduced," said the Pantaloon store manager.

"It has become more challenging for a retailer to keep his customers engaged. Buyers are now more demanding and are always looking for offers and discounts," said Harkirat Singh, MD, Woodland.

Godrej Interio associate VP Subodh Mehta said offers tend to get customers to purchase. With sales growth around 25%, compared to the 30% target, the company is not just offering discounts of up to 20% on furniture but is jacking up ad spend by close to 20%. Godrejs' same store sales grew 15% (3% below target).

"Buying sentiments will remain choppy due to the uncertain economic scenario. Customers need to get back disposable income to start spending again," said Ankur Bisen, associate director (retail) at Technopak.