End of season sale and the impact of demonetization on the sales

Capillary Technologies, the product company which provides cloud based solutions to retailers and consumer brands, empowering and enabling them to increase their customer reach, engagement levels, sales volume and loyalty, has announced the findings of a survey, titled, “End of Season Sale and the impact of demonetization on the sales.”
The changing reality of Indian end of season sales, said that contrary to popular belief that discounts are the biggest crowd pullers in retail. While overall sales in the End of Season Sale 2016 saw an increase of 14 per cent compared to EOSS 2015. During the demonetization period, between November and December 2016 vis-à-vis same months last year, overall sales and overall transactions decreased by 9 per cent and 14 per cent respectively. Discounts increased by 4 per cent and played an important role in boosting sales during the period.
Interestingly, during the peak of the demonetization drive, men shopped a little more than women. Talking of demographics, sales to women customers fell by 16 per cent during the End of Season Sale 2016, compared to EOSS 2015 whereas the overall average transaction value increased by about 4 per cent. Men sales increased by about 4 per cent and women sales increased by 1 per cent.
Contrary to popular beliefs, sales sprung back to normalcy, soon after the demonetization period between January and February 2017. Compared to the same period last year, the overall sales witnessed an increase of 25 per cent, mostly driven by an increase in discounts by 9 per cent. The number of overall transactions, i.e. number of bills increased by 22 per cent.
Speaking on the findings, VP and Business Head-India and Southeast Asia, Capillary Technologies, Abhijeet Vijayvergiya commented, “It is true that the Indian retail industry is impacted adversely in the short term due to lack of liquidity in the economy and Indian consumers increasing propensity towards transacting in cash. However, demonetization impacted the unorganized segment and mom and pop stores more than it affected the well-structured retail segments. Sales and transaction numbers post the demonetization period shows that the retail industry has stabilized owing to India’s growing economy and favorable demographic spread coupled with increased digital transactions in terms of wallets & UPI coming to the fore.”
End of Season Sale in 2016 registered a 12 per cent rise in repeat transactions when compared to the End of Season Sale in 2015. With the overall increase in discounts by 10 per cent, number of bills, or the transaction volume also increased by 12 per cent.
Explaining this phenomenon, Vijayvergiya added, “The drop in sales during the demonetization period can also be attributed to the unpreparedness of the retailers in terms of digital payments. As per Concept Paper on Card Acceptance Infrastructure released by RBI last year, 92 per cent of the debit card transactions were cash withdrawal transactions and only 8 per cent were point-of-sale transactions. This adversely affected the retail sales. Besides, certain brands that held customer loyalty and customer engagement paramount registered increased sales during this period, as sales from repeat customers displayed a marked increase.”
The last survey released by Capillary revealed a sharp fall in the number of shoppers getting influenced by attractive sale offers and discounts in End of Season Sales, due to the round-the-year discounts offered by e-commerce companies across product categories and the online versus offline price differentiators. This trend was refuted during the demonetization period, where discounts actually boosted sales and transaction volumes.