Now that spring has well and truly sprung and this means for many a new wardrobe. Warmer days are here, as too are the summer holidays, meaning it’s time to pull out our summer wardrobe and even build it out with a few shopping trips from the season’s collections.
But whilst customers get their shopping fix, it is interesting to see how retailers are faring after the frenetic discounting period that we have just come through. Starting with Black Friday, through to the Christmas sales – many launched in November – followed by deeper cuts in January, and now into the mid-season sales, the volume of promotional activity seems to me, to be greater than ever before.
We’re almost at a point where many retailers are stepping out of one sale, straight into the next. As such, how does a retailer that has used deep discounting as a tactic to maintain sales targets move forward with a level of promotional activity that is more sustainable?
It used to be that the ‘Sale’ was something of an event: a rare opportunity for customers to snag a real bargain such as a new suit or that TV they’ve had their eye on for a couple of months. For retailers, sales were the chance to refresh stock and shift old product lines. Where the ‘Sale’ used to be an operational necessity utilised by retailers to run as efficiently as possible, it’s now transformed into an integral part of the sales strategy.
Nowadays, customers have learnt new lines are likely to move to 50% off within a short period, and consequently wait a little longer before purchasing, knowing that the next sale will be just around the corner. What’s more, this causes notable damage to the perception of a brand. Once you’re associated with discounting, it’s a difficult association to shake. Brands once considered premium and high quality can lose their shine in the shadow of regular sales. It’s not a huge logical step for consumers to assume that lowered prices mean lower quality.
One brand which pursues the traditional approach to sales is Harrods which holds ‘The Sale’ once a year. For nearly 80 years Harrods has been synonymous with quality. Throughout the year prices at Harrods remain relatively constant. Consumers continue to shop there as they expect premium quality to match the prices – not a bargain. Yet, when January comes and the January Sale launches with it there is a sense occasion; the opportunity to snag that real bargain I mentioned earlier. The rarity of the occasion also means the impact on perceived quality is minimal if at all. Could the same be said if these occurred every couple of months?
By comparison, certain brands such as Blue Inc have always employed heavy discounting throughout the year to attract greater footfall and drive greater sales. For these retailers the sale isn’t an operational tool to refresh stock and cut losses, it is the centrepiece of the promotional strategy which is integral to racking up more sales. For those, however, who are moving to a discount-led approach this can be have an adverse impact on the brand; if a shopper knows that a shirt priced at £45 will be £20 within a week, why would they pay the higher price. For a premium brand, this can also impact the perception of quality with shoppers assuming that if a retailer can afford to sell at that price, that is what it is worth.
For those brands similar to Harrods that pride themselves on a premium image, a move to the discounting arena could yield immediate results and drive sales. However, once they take that plunge it is hard to go back.
However, there are some good examples of brands that have been able to claw back from this continuous heavy discounting by using tactics such as delaying or shortening sales periods and lowering the richness of promotional offers. For example, Mothercare moved away from discounting in 2014 and whilst sales were lower, it said it was also more profitable since more sales were made at full price. Similarly, Debenhams recognised the need to move away from heavy discounting and found a long term sustainable solution and Next’s mid-season sale promotes ‘up to 50% off’ whereas previous sales have been ‘50% off,’ demonstrating a reduction in the level of discounts provided.
If retailers are to adopt a sustainable model of promotional activity they must look to their brand values and ethics and ensure that these are clearly communicated across channels to provide a clear point of differentiation from their competitors in the industry. A strong brand personality that resonates with consumers will help make it easy for consumers to return time after time.
The final critical ingredient that must not be forgotten is customer experience. If discounts are used to get customers through the door, it will be the in-store experience that will keep them in store for longer and coming back more frequently as the year draws on.
