The traditional January or Summer Sales were a way of clearing old stock before restocking shelves and warehouses with the new season’s products.
However, it seems retailers are now using any and every opportunity to offer their customers discounted products, in the hope of boosting sales temporarily and moving mass volumes of stock.
In the equestrian market, more and more retailers are feeling the pressure imposed by trends in the wider retail world, leading to many following Black Friday, Cyber Monday as well as January Sales. While it is ultimately the retailer’s choice whether or not to participate, there is almost an expectation from customers that discounts will be available. This may even damage sales in the run up to one of these retails events. Who is going to be purchasing anything on the day before Black Friday or Cyber Monday?
Sales, or the absence of them, are a great test of customer loyalty. While it is harder to shop around equestrian shops physically (many of which are few and far between in parts of the country), the ease provided by online shopping outlets means customers can easily find the same product at a number of different price points. This leads to people discounting their brand in order to be able to compete with one another, and ultimately devaluing their brand.
Sales only works if you get the volume. Cutting your profit margins and putting more work into achieving a higher number of discounted sales (rather then a small number at full price) is quite frankly, unsustainable for most smaller businesses. While you may want to wow customers with huge savings and prices that can’t be beaten, this must be done appropriately for each individual business. Consider what was paid, how many products are predicted to sell and how large a price drop you can sensibly offer. These considerations come hand in hand with more pressing matters – what will happen in the long run if you don’t manage the predicted sales and will the business be able to recuperate any losses incurred.
While it may seem ‘the thing to do’, do all these discounting opportunities throughout the year actually benefit a business? Rather than steady and sustained profit making, is it not just causing margins to fluctuate?
This brings us onto the topic of discounts. When used effectively, discounts can boost the footfall of buyers tremendously, but on the other hand, they can actually destroy price integrity. Offer a product in a Sale and people think they’ve found a bargain, however offer the same product with a general discount, the buyer may question the quality and believe it to be old stock or inferior in some way.
Discounts may ultimately damage your customer loyalty too. Having paid a set price for an item, then to find it discounted for no apparent reason, the customer may infer that they had been overpaying previously – not an effective way to maintain client relationships.
Customers might mock the likes of DFS, for always having a sale on. However, it is those self-same customers, who will vote with their feet when the chance comes along to buy a product cheaper, or will leap at the chance to inform you that it’s 99p cheaper at someone else’s store.
In the end, the answer to some of these modern shopping phenomenon’s might just be good old fashioned customer service. And yes you can offer excellent on-line customer service – take a look at that retail paragon John Lewis. If you offer fantastic customer service, you might just find that customers don’t begrudge that extra few pounds come next Christmas.
Who’d be a retailer? Happy Christmas and a prosperous New Year.