Low consumer confidence in the aftermath of the November eight currency swap announcement has prevented brands from liquidating last season’s stocks as, analysts said, even discounts of up to 70 per cent don’t seem to be enough to bring back buyers of Zara’s jackets or Van Heusen apparel. Promotions, cashbacks and discounts by brands such as Marks and Spencer, Tommy Hilfiger, Pepe Jeans and Superdry did not seem to have lured enough consumers, stretching the discount season that typically lasts about six weeks by at least a month, said industry executives and retailers said.
This time, stocks have piled up because of demonetisation and brands that still have inventory left are on sale. Usually, the trend is that the inventory of the coming season is decided according to the performance in the previous years. Sales should this time, get over by next week, around Holi. Usually, retailers stock up for the new season by Valentine’s Day, February 14.
While India’s third-quarter economic output data did not point to an aggregate slowdown in the third quarter, several chief executives of global consumer companies said the government’s decision to overnight restrict the use of Rs 500 and Rs 1,000 bills affected purchasing power and temporarily hit sales of products such as cookies and aerated drinks.
This is the first such extension by the fashion industry since 2011, when an excise duty increase on branded apparel in that year’s budget prompted prices on such products to jump by 15 per cent, leaving retailers with high inventories. Before 2011, sales had an extended run in 2008-9 in the aftermath of the global financial crisis.
To counter dipping consumer confidence, fashion brands offered buyers discounts anywhere between 40 per cent and 70 per cent until February end, and some of the offers are still valid. Spain’s Zara, for instance, generally goes into fully new merchandise weeks before March, but this year various items from men’s shirts to women’s winter wear were still on sale until last week.
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