High input costs discourage retailers from doling out discounts
23 Aug '11
1 min read
'Discount' was once a term related to festival seasons. However, in today's cut-throat market situation, retailers are offering 50-90% discounts on the MRP at any time of the year. Despite such high discounts, apparel retailers are able to maintain profit margins due to the high MRP of apparels.
This situation was favorable until the declaration of the Union Budget for 2011-12 wherein readymade garments were under an optional excise duty regime. The current budget has declared a mandatory excise duty of 10% on branded garments with an abatement of 55%.
Buying activity starts picking up 20-45 days in advance of the approaching festival. With festivals approaching in late September and continuing till year-end, brands are however cautious about giving discounts considering the hike in raw material prices as well as the mandatory excise duty.
Sales during the last four months of a calender year account for almost 40% of the total apparel sales.
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