Mall Talk Issue July - 01 - Scai.in

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S CA IIssue-0 6 l Vol-04 l July 2013Importance Of Sales Seasons In Indian RetailIndustry stakeholders tell us how can Indian shopping centres maximise the benefits of the end-of-seasonsales.End of Season Sales (EOSS) are the highpoints of Indian shopping centres all July. Reports from various shoppingcentres indicate that sales have shown up to 40 per cent year-on-year growth. How can Indian shopping centresadapt themselves to maximise the good that comes from EOSS in January-February and July-August. Retailers inmost categories announce sales with offers ranging from 30 to 70 per cent, maximising their gains by sporadic salesthroughout the year.Shibu Philips,Business Head, Lulu MallIndustry stakeholders say that promotions increase both footfalls and revenue. “Salesseason generally witness a 40 per cent increase in revenue and 15 per cent in footfalls forthe mall. During a normal period, the conversion percentage is generally between 25 to 30per cent, which will increase to 60 to 70 per cent during the sales season,” says ShibuPhilips, Business Head, Lulu Mall.Mall management professionals agree with the concept. “Customers hold back theirpurchases specifically for the sale period to get more value for their money. The seasonattracts huge footfalls and helps to boost the retailer's revenue. There is almost a doublejump in footfalls and revenues which creates a win-win situation for all stake holders,” saysMukesh Kumar, Vice President, Unique Estates Development Company, which owns Infiniti Mall.Bijou Kurien, President & Chief Executive-Lifestyle, Reliance Retail Limited, says that the impact of sales andpromotions is even higher in malls compared to high street shops. “Promotions and sales have an impact on retailers– those on the high street and in malls. However, given the tendency for impulse shopping in malls, the impact inmalls is relatively higher. Normally, the expectation is that sales would double over the normal average during thesales season,” he says.For some shopping centres, sales and footfalls are not necessarily related. JonathanYach, Chief Executive Officer, Propcare Mall Management (India), says,“Interestingly, whilst sales increase substantially over sales periods, footfall rarely risesmore than five per cent above the mall average growth for that period.”International norms dictate four seasonal sales, to clear the stock of the previous seasonand to introduce the new season's merchandise. Retailers across the world also create andcelebrate occasions and festivals such as Mother's day, Father's day and Valentine's Day.“Every change in season, international or national, the basic norm is stock clearance. Atother times as well certain brands have regular offers on certain stock which is marked asa separate discount/offers section in the store. For example, Zara gets 75 per cent new inventory in all their storesevery three weeks. The rest of the inventory is put on sale or on special offers in a separate section,” says Philips.In India, consumers and regions react differently to both the sale periods. Kumar says, “There is a lot of differencesince it's a clearance of stock in the season's end. So we see Jan-Feb with a lot of winter collection and cool colourschemes and July – August with a lot of summer collection and warm, vibrant colour scheme. Traditionally July-Aughas been a better season.”Jonathan Yach,CEO, Propcare MallBackNext
S CA IIssue-06 l Vol-04 l July 2013Mukesh Kumar,Vice President, Unique EstatesDevelopment Companylooked upon marketing activity,” says Philips.Kumar says that the world economic downturn has not impacted the fashion conscious whocontinue to shop, on the back of disposable income. However, Kurien says that the globaleconomic downturn has seen increased promotional activities. “The tendency to go on salehas only increased due to the past and current slowdown that we are witnessing. Whilethis temporarily helps to increase sales, it is not sustainable in the long term,” he says.In some markets, the downturn has resulted in structured, long term changes. “The onlychange witnessed during the recession in 2009-2010 is that the sale period was extendedby retailers to a 45-day period instead of the normal 20-30 days. Another noticeablechange that has been observed is that certain brands are now manufacturing specificallyfor the sale period. Instead of just being a stock clearance activity, sales are now a muchFor sales and indeed the shopping centres to be sustainable, stakeholders need to work in cohesion. For malls thathave a revenue share models, there are various combinations that suit both parties. “When sales rise, revenue sharein that month rises too,” says Yach.But, even who don't work on shared revenues, there is much to do. Kumar says, “As a mall we do loads of marketinginitiatives to encourage our tenants during their sale season. We plan a Flat 50 Per Cent off day in which more than100 brands participate. We extend ourselves and promote this day so that it helps in boosting the sale of the retailersand exert a pull on footfalls to the mall. Our marketing campaign runs through print ads, radio, outdoor hoardings,social media and online forums and in mall communications.”Given that sales seem to driving revenues – reports indicate that sales have zoomed up 40 per cent Year On Yeargrowth – is it not in the interest of the mall management to encourage them?Philips tells us that the norm is that at the time of signing the revenue share deal itself, a lesser percentage is agreedupon as the revenue share during the sales period. However, he says, “In case of revenue share as well, an increaseof 40 per cent is seen in the revenue during sales.”In fact, retailers in shopping centres, with revenue share models, have worked out for the benefit of both parties.They have it better than the high street retailers who are bearing the brunt of soaring rentals in tier-I cities.Kumar points out, “We do not operate on revenue sharing model. But, generally, on a revenue sharing model theprofits are marginal during the sales season. However, it generates huge turnover and also clears the dead stock.Revenues go up during the sale season giving more share to the developers.”Most shopping centres see the benefits of EOSS. Kurien says, “Malls can do a lot to supportthe sales periods of retail stores. Orchestrating the selling seasons, ensuring that retailerswithin categories complement each other, optimising the sales schemes of differentretailers to prolong the overall sales season,” are some of the measures he lists, along with“freebies thrown in by the malls such as lucky draws, coupon schemes.”Philips gives an example of Lulu Mall and shopping centres. He says, “Most mallsorchestrate a complete event out of the sales period. Some malls do one day off, some flat50 per cent off and there have been cases of the stores being able to do the whole month'ssales in a single day. Other malls do extended events with shop and win contests andother entertainment activities to cajole customers into shopping more. At Lulu Mall itself,we are combining the salesBijou Kurien,President & Chief ExecutiveLifestyle, Reliance Retail LimitedBackNext
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Mall Talk Issue July - 01 - Scai.in

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