It’s festive season and with it comes deep discounts on all products ranging from apparels, kitchenware and electronic items as offline and online retailers aim to clear their inventory.
The likes of Amazon will offer huge discounts of 10 to 80 per cent, while offline retailers have limited their discounts to 10 to 30 per cent.
Confederation of All India Traders (CAIT) National Secretary General Praveen Khandelwal said that the discount level this year is more compared to last year due to high inventory pile-up owing to the economic slowdown.
He added “Last year, the discounts averaged from 5 to 10 per cent. This year, those are in the range of 10 to 30 per cent. For the stocks lying unsold for the last one year, the discount is more than 30 per cent. Online retailers are giving discounts up to 80 per cent to corner more market share.”
Economists are of the view that the wholesale price index (WPI), which reflects producers’ pricing power, has been low in the recent times, being the lowest in 25 months in August, and has no hopes of climbing up due to the large amount of unsold inventory as well as sub-optimal capacity utilisation.
The lower capacity utilisation in manufacturing sector is one of the main reasons private investment has remained subdued. Most of the retailers have complained of squeezed margins owing to deep discounts that are necessary to maintain cash flow even if that means loss.
Harish Bijoor, Brand Strategist, said “The market was gung-ho for a long time as the consumption was only soaring. Keeping with that, the manufacturers created huge inventory, which has got stuck all of a sudden due to the slowdown. Now the best way to clear the inventory is to get the goods going at deep discounts.”