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Companies need to restrict dumping to augment growth
Apr '09
Retail companies, whose market shares are less than 15%, project a sales growth very close to the market growth. Reasons for this low sales figure is being estimated as less demand for the product and more investment would be required to create or increase the demand.

Generally companies attempt to cover up for the lost sales by dumping the distributors and retailers with high stocks. It also enables the companies to lock the retailer's capital and stop him from buying other brands. But this only increases the percentage of 'lost sales'.

When his capital is locked, the retailer does not have any other choice than to display the product on his store shelf. Sales loss is very high for these companies. The right way is to hold the stocks back and replenish frequently only to the extent the products are sold.

A more simplified mechanism can be applied to the distributor – retailer link. Increasing the frequency of visit and not dumping the retailer or distributor with stocks enables 100% availability of wider range at retailer. The retailers' incentive schemes can be restructured to ensure space shelf and range.

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Fibre2fashion News Desk - India

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