Walk down a busy high street at any time of the year and it’s likely you’ll see store windows displaying ‘sale’, ‘clearance’ and ‘discount’ signs advertising their latest offers and promotions. Better yet, spend some time in the comfort of your own home shopping around online and it’s likely you’ll find the product you’re looking for at a reduced price from any of the online retailers at any time of the year. Consumers have become accustomed to regular discounts, and will be constantly on the look out to find the best price for the products they’re looking for.
Taking a look back towards to the end of 2015, the official Christmas shopping season kicked off with Black Friday in November, signaling the start of heavy reductions and crowded shopping centres and high streets. The ‘January sales’, which have been regularly starting from Boxing Day, began even earlier this year, with some stores reducing stock prices as early as Christmas Day and online retailers doing the same. With constant discounting and year-round ‘sales’ customers have become so accustomed to seeing promotions and price reductions all year round, we need to ask ourselves are the ‘January sales’ still relevant?
Discounts are all year round. If you’re a regular shopper and have signed up to mailing lists, it’s likely your inbox will be filled on a daily basis with emails from retailers letting you know about their amazing latest offers. And as retailers succumb to a near-constant state of discounting, customers have become numb to those discounts. What can only be described as Discount Fatigue means that what would have once been considered a ‘steal’ or an ‘opportunity not to be missed’, now no longer fazes shoppers, which for retailers means it takes a really large discount to even get shoppers’ attention.
Never has the discount, and its power to spur purchases or cause customers to wait for something better, been more on display than this past Christmas season. Black Friday, normally the start of the Christmas shopping period, turned out to be a week long affair for some retailers such as Amazon, and we saw some very different shopping behaviour in 2015 compared with 2014, with more shoppers choosing to shop online rather than face the angry crowds of discount shoppers. The high street experienced a 4% drop in footfall over the Black Friday 2015 period compared to the previous year. According to experts, this year’s UK Black Friday failed to boost sales because many retailers did not make the discounts shoppers had been hoping for, putting more pressure on retailers to continue slashing prices throughout the Christmas shopping period.
However despite the continuous discounting, research from BDO revealed that 2015’s Christmas retail figures were disappointing, displaying the biggest drop in seven years with a 5.3% decline in like-for-like high street sales in December. The disappointing Black Friday sales followed by less than impressive pre-Christmas sales, left high street retailers desperate to shift stock and over-reliant on heavy discounting during the January sales period, hoping to entice consumers back to the high street in the new year. But as merchants try to outdo each other to drive traffic and sales, they’ve turned the deal from exciting to expected. The problem with this continuous expectation from shoppers to receive constant discounts, is that it can comes at a cost to retailers, who often have to sacrifice profit margins to be competitive on price and give shoppers the discounts they have come to expect.
Credibility an Issue
Dispatches documentaries and clever investigative journalists have uncovered the truth behind some of the best loved retailers’ discounting practices, revealing that not all is what it seems at times. This has made the public more skeptical and quick to question whether a discount is in fact what it seems, or whether the original price has first been inflated to then appear to be dramatically reduced in the hopes of attracting ‘gullible’ customers. It’s not to say that all retailers abide by such shady practices, but the truth is that the public has become less trusting of offers and discounts, and will likely ‘shop around’ before buying into the notion that they’re getting value for money. And with the constant barrage of offers being placed in front of consumer’s eyes, it’s no surprise that many are starting to question the credibility of such offers or whether they’re just being used as a ploy to lure customers into parting with their hard earned money.
Personalisation is Key
Given the discount fatigue and credibility issues already discussed in this article, it’s becoming clear that the way retailers offer promotions and discounts needs to change so as to grab shoppers’ attention without the need to slash prices by so much that retailers’ profit margins suffer to the point where they’re struggling to keep the doors open.
This is where personalisation becomes ever more important. Discount fatigue setting in doesn’t mean that shoppers want to give up deals. What it means is that they’re no longer excited by a blanket 10% offer at a store they’ve previously shopped in and have become savvier at knowing when to pounce on an offer. Tamer Tamar, Senior Vice President at Groupon EMEA argues that “what consumers want is greater targeting with more relevance” and Marshal Cohen, Chief Retail Analyst at The NPD Group says that “At the right moment and the right price, we’ll buy”. What this tells us is that relevance, personalisation and being there in the moment are the three key areas retailers need to focus on going forward.
In essence, with discounts and sales being available all year long, it seems that the traditional format of the January sales will slowly become less relevant to savvy consumers. In fact, what makes retailers stand out during the busy shopping season is offering personalised and tailored promotions targeted at individual consumers. Personalisation is key, which means getting to know your consumers and understanding their shopping behaviour is a crucial step to getting it right. With a product like mporium insights, retailers can begin gathering the information needed to understand exactly what their customers want, when they want it, enabling them to offer timely, relevant and personalised offers.
What about you? Do you think the January sales are still relevant or is the public so bombarded by annual sales, it’s become less important? Let us know in the comments below or get in touch via social media, and don’t forget to subscribe to the blog.