Retailers trying new strategies to keep monsoon sales alive

Rain rain go away, come again another day may be a line from a popular rhyme learnt at school. It however could also be a refrain by retailers in the State as well as the rest of the country. The rains cast a damper on sales which can be quite dramatic. 

The retail story of India may have excited corporate’s around the world.  The Boston Consulting Group and Retailers Association of India published a report titled, ‘Retail 2020: Retrospect, Reinvent, Rewrite’, highlighting that India’s retail market is expected to nearly double to US dollar 1 trillion by 2020 from US dollar 600 billion in 2015, driven by income growth, urbanisation and attitudinal shifts. True that, but there are certain ground realities which cannot be ignored.

A national retail chain which has entered the State by taking space in the recently inaugurated mall at Porvorim is experiencing a slowdown in sales across categories. A senior executive who spoke on condition of not being identified said it was an unwritten truth in the retail trade in the country that sales would drop in the monsoons. 

The executive said “People don’t like to step out of their homes. Movement is a problem. The roads are flooded and it is messy. Our sales suffer.” 

The retail chain usually handled this by introducing home delivery and pay on delivery in other States. Sales, according to the executive, usually dropped by 10 to 15 per cent during the monsoons. Compared to last month, revenue had dropped by exactly 15%. There was a drop in the sales of general merchandise. During the monsoon there was an increase of products meant to protect ones health. Flying insect killers, mosquito coils, trash bags and yes a dramatic increase in the sale of soups and frozen snacks. The sale of soft drinks collapsed during the monsoons. The sale of frozen veg and non-veg products usually witnessed a rise in the monsoons. Another observation of the executive was the very high percentage of consumers indulging in impulse buying in Goa. There was no limit to these transactions as long as the product was perceived as value for money and long lasting. 

The sale of basic groceries in the State was usually done at the local market. An online portal involved in providing groceries online has shut due to poor response from the Goan market. However another major player in the retail space in the State, Kirit Maganlal of Magsons, said “we are making a strong attempt on cornering the sale of groceries and other essentials by providing delivery at home free of cost if the transaction was over Rs 500.” 

He said “The monsoons usually are bad for business. However we maintain a constant average because the drop is compensated by the fantastic business done in the festive season that follows. We experience a spurt in business to the tune of 50% in the run up to the festive season.”

With regards to the monsoons there was a drop of approximately 10% to 15%. Soft drinks, ice creams sales dropped but detergents, fine foods and cheese increased. 

The test run of the proposed launch of the home deliveries via the online platform scheduled to be launched shortly was coming along very well. 8 out of 10 customers were interested in having their groceries and other purchases delivered home.

In categories like textiles the monsoons are dominated by the preponderance of sales. Buy three shirts and get three free or buy two jeans and get one free equal to the price of the higher priced purchase.

Shubu Kapsekar of the Ed Hardys’ said the special offers were the difference between fantastic sales and no sales at all. He said “If we don’t have sales, we sell one or two pieces. On such days we sell upto Rs 1 lakh in sales. The monsoons are a tough period but special offers are what help us in such times”.   

Special season ending sales help drive sales in footwear business during the monsoon. It is also helps clear inventory and prepare for the new season which would start in August. The sale of televisions and other white goods takes a hit during the monsoon with customers interested in saving money for the festival season. 

Felipe of Prime Electronics in Panjim said business had flat lined which was nothing unusual for the monsoons. Business would usually pick up in August. Another major player in the white goods industry said, the monsoons were the time when his staff usually went off on holiday because there was no business worth the name. He said “Occasionally someone will walk in and buy a water heater. It’s not worth keeping my shop open during the monsoons but I keep it open to avoid the spread of rumors in the market”.   

The stakes are pretty high in Goa and in the rest of the country. The retail market is expected to reach a whooping Rs 47 lakh crore by 2016-17, as it expands at a compounded annual growth rate of 15 per cent, accordingly to the ‘Yes Bank - Assocham’ study. The retail market, (including organised and unorganised retail), was at Rs 23 lakh crore in 2011-12. According to the study, organised retail, that comprised just seven per cent of the overall retail market in 2011-12, is expected to grow at a CAGR of 24 per cent and attain 10.2 per cent share of the total retail sector by 2016-17.

According to panel members at the seventh Food and Grocery Forum India, the opportunities in food and grocery retail in India are immense, given that it constitutes about 69 per cent of India’s total retail market. The Indian retail market, currently estimated at $490 billion, is project to grow at a compounded annual growth rate of 6 per cent to reach $865 billion by 2023. Modern retail with a penetration of only 5% is expected to grow about six times from the current 27 billion USD to 220 billion USD, across all categories and segments. Goa has a population of about 14 lakh and even here the numbers will be inviting and the winners will go laughing to the bank.