Indian Retail Sector

Vishal Mega Mart Back on Track

Reliance offers discounts starting at 15% and going up to 63% (to coincide with the lifespan of independent India) while Croma has branded all of August, Independence Month and has a slew of offers. Ajit Joshi, CEO and managing director, Infiniti Retail, says “There is a 20% to 25% increase in footfalls. Normally for a retailer when footfalls go up, conversions drop. But during August and through our February sale, the conversions go up by 4% to 5%.”

Delhi based Vishal Mega Mart claims that its six day long independence sale contributes 2% to its annual turnover. Says founder, RC Agarwal, “There’s a 30% to 40% increase in footfalls and conversions are in the same ratio.”

Retailers have a slightly different take on why this has become such an important sale occasion. Joshi considers it a chance to clear the decks in anticipation of the festive season which sees many new releases and products from durables companies. He adds, “Through the monsoon, shopping becomes a bit challenging in places like Mumbai because of flooding. You need to create activities to draw footfalls.

Malls provide relief and a secure environment to take your family to.” Unlike the festive season which is dominated by positive consumer sentiment and a quest for great deals, August is more the month of bargain hunting.

Gupta sees in these sales a great opportunity to streamline production: “It has established a more balanced demand pattern. Earlier the only area that wasn’t optimised was the supply chain. It now no longer peaks through one month for Diwali but across six months of a festive season. A single 15 day or one month peak is a major logistic challenge and costs a lot of money. But over five or six months, it is much more manageable.”

It’s also a great time to sell off-season categories. Some of the best deals at the moment are on air conditioners that are typically summer purchases. But as Gupta points out, “People don’t wait for the summer any longer since the offers are very attractive. Similarly, after the monsoon, there will be a lot of offers on washing machines. It’s a great collaboration between customer and manufacturer.”

The focus, at least at Big Bazaar, has been principally on the less affluent segments of the population, dubbed by Biyani as India 2. It is comprised of people who are — or used to be — reluctant adopters of modern trade. The idea when the sale first began, was to draw the masses in with products and prices that attract them. The choice was obvious once the team at Future realised they were looking for a truly secular national holiday; a day off for every potential customer.

Preparation for the sale starts six months in advance, with the team from Future working closely with partners including FMCG players to create special bundled offers. According to Biyani, “The consumer insights team works on what can sell this year, what are the categories where the aspirations are rising and accordingly the team works on creating, buying and sourcing the products. The preparation has to start early since these products can’t come in a day. They have to be prepared and produced specifically.”

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