The deals on clothes, electronics and footwear that have been enticing shoppers to splurge may reduce significantly, as retailers including Aditya Birla Fashion and Retail (ABFRL), Arvind and V-Mart have ruled out deep discounts in a move to spur profits.

Madura Fashion, which manages brands such as Louis Philippe, Van Heusen, Allen Solly and Peter England, said that during the second half of the previous fiscal, especially the fourth quarter, it managed to reduce discounts by 500 basis points to drive profitable growth.

“We also realised that we were quite alright on inventory and we didn’t see much elasticity and in discounting,” Vishak Kumar, chief executive officer at Madura Fashion, told investors. “We kept that tight and that was part of the cost reduction efforts also.” In FY24, retail sales growth rate fell year-on-year every month, reflecting weak consumer sentiment across segments such as apparels, footwear and quick service restaurants (QSR). FY24’s comparatively slower growth rate of 4-7 per cent sustained this year as well, with April seeing a 4 per cent increase, the Retailers Association of India (RAI) said after a survey of the country’s top 100 retailers.

For the last year and a half, retailers have tried to counter slowing demand with constant discounting. But the price cuts haven’t helped much.

Department store V-Mart, which operates in smaller towns, said it has shifted focus to internal capability, which is scalable, replicable and sustainable. “So, those are certain things that we are trying to do, not putting any kind of steroids in the overall process so that we get certain growth just by giving more value to the customer or giving more discount to the customers,” Lalit Agarwal, chairman of V-Mart, told analysts. “We are not acting on any of such thought processes of reducing the gross margins.”

As Covid eased, pent-up demand led to a boom in sales across athleisure wear, apparel and lifestyle products. Consumers upgraded wardrobes after offices reopened, and eating out and socialising picked up. This led to 13-24 per cent monthly growth throughout FY23.

Shailesh Chaturvedi, managing director at Arvind Fashions, said that after the pandemic, most retailers are moving to a direct-to-consumer model for online sales, which means they control the merchandise, assortment and price instead of ecommerce marketplaces.

“We deliver it at the prices that we want and not heavy discounting, etc. So there’s a sort of healthier and long-term business,” he said during an earnings call.

Bajaj Electricals Chief Executive Anuj Poddar told analysts last month that discounting is as high as 5-6 per cent in the market in the electronic product categories the company operates in. He said some of this is being pulled back since it is affecting margins, adding that the company recently increased prices. “We will take a bet that we will take a price hike and, in fact, hopefully not have an adverse volume impact on that, but not all of the 6 per cent can be rolled back right now,” Poddar said.