Sales Promotion Practices in Retail Sector

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INDIAN INSTITUTE OF MANAGEMENT AHMEDABAD INDIA

Research and Publications

Sales Promotion Practices in Apparel Retail Sector and Challenges Ahead Preeta H. Vyas

W.P. No.2007-11-02 November 2007

The main objective of the working paper series of the IIMA is to help faculty members, research staff and doctoral students to speedily share their research findings with professional colleagues and test their research findings at the pre-publication stage. IIMA is committed to maintain academic freedom. The opinion(s), view(s) and conclusion(s) expressed in the working paper are those of the authors and not that of IIMA.

INDIAN INSTITUTE OF MANAGEMENT AHMEDABAD-380 015 INDIA

IIMA

INDIA

Research and Publications

Sales Promotion Practices in Apparel Retail Sector and Challenges Ahead by Dr. Preeta H. Vyas Indian Institute of Management, Ahmedabad

Abstract: Indian organised retail industry is poised for growth. Apparel sector in particular has a great opportunity with alignment of Indian economy to globalised markets. With the widespread use of sales promotions- short term activities which provide material inducements to consumers and trade it becomes imperative for managers to understand such practices and understand challenges. This study investigates sales promotion activities of six apparel stores in Ahmedabad market and compares them on various dimensions. It presents major findings and provides insights on consumer behaviour. Lifestyle, for instance, has a loyalty programme called `The Inner Circle', while Pantaloons offers a `Green Card' Rewards programmes, Westside has `Club West' to

woo the customers. Managerial challenges are posed in planning and implementing such activities. The paper concludes with future bright outlook.

W.P. No. 2007-11-02

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Sales Promotion Practices in Apparel Retail Sector and Challenges Ahead Introduction In India, clothing retail accounts for 36% of organised retail business. It is the largest sector. Ready-made apparel accounted for an estimated 20% of domestic clothing sales in 20051. With growing working women wearing western wear to work, and pressed for time, market for good readymade clothes is likely to grow.India is a film-crazy nation, and the largest producer of films, with more than 1,000 every year. They provide entertainment and an escape from reality for India’s masses, and set the popular fashion trend. Bollywood fashions have become pan Indian. They affect various sectors of the market including clothing, footwear, weddings and fashion accessories.

With the advent of modern format retailers and the growth of plastic cards, affluent urban Indian women are shopping like never before. They spend mornings browsing in stores looking for deals or latest styles.Upper income urban women are adopting ethnic chic. These are designer clothes that incorporate Indian motifs, ethnic fabrics and are a fusion of western and Indian styles.

In the large urban centres, apparel retailers, like Shoppers Stop, Westside and Pantaloon have popularised their private labels, which have attracted urban shoppers. Westside carries only its own private labels, while for the other stores, 20-30% of their apparel turnover is from private labels. Customers have loyalty to a store rather than any particular garment brand. This has led to a thriving unbranded or local brand market for ready-to-wear clothes leading to severe competition. Hence organized retailers like Lifestyle, for instance, has a loyalty programme called `The Inner Circle', while Pantaloons offers a `Green Card' Rewards programmes, Westside has `Club West' to

woo the customers. Customers look to design and fit of the clothes, and use the shop’s name as a quality standard.

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Consumer Lifestyles in India, Euromonitor International Consumer Lifestyles Database(2005) W.P. No. 2007-11-02

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