Inflation a blessing in disguise for retailers.

Everyone loves a good discount. And it comes in as an incentive especially during times of inflation.  For apparel discount retailers, inflation has proved to be a blessing. Arvind’s branded discount retail  chain Megamart has seen an improvement in walk-ins of 15% in the past few weeks.

“During inflation, customers always prefer to shop in a value retail outlet,” says KE  Venkatachalapathy, business head of Megamart. The increased footfall is reflecting in the sales  figure of Megamart as well. While he refuses to divulge exact numbers, Venkatachalapathy says  there has been a 20% increase in sales compared to the corresponding period last year. Discounts  here vary from 10% to 30%.

“Inflation and discount retailing are directly proportional. Customers normally tend to flock to value  retail stores where they are assured of good quality at reasonable prices,” says Raghunath  Narayanan, MD of Chennai discount retailer Europa.

Discount retailing, a post World War II phenomenon, is an established market practice in countries  like the US. This concept is now picking in India, which is a price sensitive market. Discounts have  always worked well with apparel and factory outlets in the suburbs of many Indian cities and shopping  hubs like Fashion Street in Mumbai and Marathalli in Bangalore which acquired sobriquets as an  export market bear testimony to this. Now inflation has come to the aid of retail majors.

The Loot, a discount chain, has seen footfalls increase by at least 10% in the last few weeks across  its 35 stores in 15 cities. “In Mumbai alone, our footfalls are up by 17% in the last three weeks. In the  first quarter, we had sales of Rs 15 crore. In the next quarter , we expect this to climb upto Rs 25  crore,” says Jay Gupta, MD of The Loot.

In apparel, children’s wear seem to be the biggest beneficiary. “As children, especially toddlers.  Normally outgrow their clothes pretty fast, parents are flocking to discount stores such as ours more  than ever before,” says Narayanan. While the discount offered by the apparel and luggage chain is  between 25 and 30%, in kids wear it’s 30%- 40%.

The consumer base is also widening. “From a largely middle class audience, I now see people  getting out of cars like Honda Accord and Mercedes Benz outside our stores,” says Gupta.

The rush to such outlets is also due to the fact that regular apparel retailers and multi-brand outlets  mostly offer off season sale only twice in a year. “But in times of inflation and continued price rise, the  consumer is looking to cut spends across categories on a daily basis,” says Venkatachalapathy.

Brand Factory too has seen a 5%-7 % increase in our sales over the past few months. “While we  cannot say that entirely due to inflation, we cannot rule out that it has played a role,” says Vishnu  Prasad, CEO of Brand Factory. 

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One Response

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