Many Indian apparel retailers are offering discounts ranging from 40% to 60% three weeks ahead of schedule this season (newspaper article). Sales have been impacted by 20-30% due to higher excise duty taxes and higher cotton prices which have led to a 10-15% rise in product prices.
Could this situation have been foreseen by the retailers? Are they too late on the buzzer? One can only say that apparel retailers will do well to use BI and analytics better to track sales shortfalls in real time and adjust pricing before everyone else realizes that a slowdown is on.
From an analytical perspective here's what they could do:
1) Price elasticity studies and market surveys to understand the impact of 10-15% price rise on demand
2) Markdown models that advise the retailer on how much the price should be discounted if a particular sales target is not met in the early weeks/months of the season.
These are especially relevant in the Indian market since the festivals/ holiday periods occur in the middle of the season (e.g., Divali) and dates vary year by year. Retailers need to be very nimble to adjust prices quickly if festival/holiday targets are not met.
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