Retailers had an unsold inventory of 15 to 20 per cent despite advancing their winter sales by a couple of weeks and doling out additional discounts of 20-25 per cent to clear their merchandise, according to the retailers Business Standard spoke to.
Retailers started their end of the season sales in mid-January as against the normal start in February and are giving up to 80 per cent discounts to attract the shoppers.
"We will bring down our summer inventory by 10 to 20 per cent as our winter stock would have to be carried over to the next year in the same proportion'', said Balvinder Singh Ahluwalia, president, Koutons Retail, a Delhi-based apparel retailer.
Vishal Retail, which had a total inventory of Rs 813 crore on December 31, 2008, is also planning to bring down its summer inventory by 20 per cent, according to Manmohan Agrawal, Chief executive, Vishal Retail.
"Retailers are being prudent by bringing down their summer inventory in proportion to their unsold stock of winter season as they will face working capital problem in the coming months'', said Purnendu Kumar, associate vice president of business consultancy Technopak Advisors.
Indian retailers would continue to see liquidity pressure in 2009 due to slowing sales, margin pressure and poor economic conditions, Fitch Ratings said recently.
"Slowing sales resulting in lower inventory turnover and increasing working capital requirements have resulted in liquidity pressure for many domestic retailers,'' said Fitch analysts in a statement.
According to industry estimates, October to December sales, which constitute nearly 40 per cent of the total apparel sales in a year, have fallen over 25 per cent, compared to the last year.