Stampede of price driven promotions!

I get to cross this mall daily on my way back home and its one of the most popular malls of Bangalore. Always damn crowded and is having all popular brands which you can think of. It used to have those occasional promotions during Diwali, Christmas or End of season sale. But now instead of those occasional sale offers, the mall has sort of become “discounted product” mall only. Just think of last 3 months – November they were having “festival special”, December they were having “Christmas / New Year Special” and now in Jan, 1st it was “26th Jan” special which got extended to “end of season sale” on 27th Jan’09. 😀 Wow every day there is a sale and most of these are not “upto 50% off”, rather “FLAT 50% or 40% off”.

Well as a consumer, it’ too good and I’m loving it but then it forces me to think, are these brands going through sales volume crisis which is forcing them to come out with such price driven promotions every day? Is it another after-effect of recession? I can understand it for few brands but almost every brand is currently running a price driven promotion including some very big names which are not so famous for their discount promotions. Even they have jumped into this price game now. One walk in any popular mall / market and you will see nothing less than a stampede of price driven promotions. As a first impression, it definitely communicates that brands / retailers are trying hard to sell the products to Indian consumers who have otherwise become conscious now of their expenses esp. in categories like luxury & entertainment. Since not many consumers are hit by recession in India as badly as in US, so expenses in necessary categories are still going on but if I think of me, my friends and acquaintances as a sample set, I definitely know that people have curtailed frequency of activities like eating out, multiplexes, impulse apparel purchase and frequent air flying. Though price driven promotions like these are good to some extent, it helps in attracting attention of consumers but do such tactical sales promotions and that too regularly really help companies in meeting their numbers? And even if they will meet their numbers, how about their P&L? And with most of the main marketing budget frozen now, do they have any other option than to do such promotions to increase footfall…Hmmm let me think and in case you have any thoughts, do share it here. In the meantime I think I should enjoy these sales and discounts before companies realize that its hitting their margins badly and decide to stop it J

Update on 30th Jan’09: Two interesting observations related to this post:

·         Yesterday I actually stopped at that mall and went to this very prominent apparel retail outlet, they were running an announcement there for promos and offers. And guess what? Despite yesterday being 29th, the promotions running were having old dates, one of the announcements sounded like, “100% money back offer! Dear shoppers, shop for X amount between 10th Jan – 26th Jan and get a gift voucher worth Rs. X back”. And no, the date was not announced by mistake, they kept on repeating the same recorded message J. The promo was still on but collateral as well as promo clip was having the last date as 26th Jan’09. Clearly communicates that they had plans to end the sale on 26th but were continuing it till now!

·         Today’s ET states – “Subhiksha is closing a significant number of its 1,600 stores across the country to cope with a cash crunch”. Very recently I read a write-up mentioning Subhiksha’s success story and while I was wondering on these price driven promotions and cash situation of the retailers, here I get to read about a situation which is self-explanatory and that too of Subhiksha! Wondering if other such announcements are also on their way?

 

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