A game of chicken is about to take place between Christmas shoppers and fashion retailers.
As has been well documented this year, post-recessionary consumers have become so used to getting a bargain that many will now hold out until they see the item they want on Sale before making their purchase. This is behaviour that most commentators agree is unlikely to change back again even when the financial climate improves, so the challenge for retailers is holding their nerve even when some of their competitors may go into Sale early pre-Christmas to drive footfall.
Exclusive research unveiled in this week’s Drapers shows that this Christmas trading period looks set to be a real battle of nerve between consumers who are waiting longer each year before buying in the hope of getting gifts cheaper, and retailers who are trying to regain lost ground from early discounting in previous years.
Throw into that mix some high street retailers who plan certain pre-Christmas promotions earlier than their competitors to steal footfall, and you have a recipe for a real battle of wills.
At last week’s Drapers Fashion Summit it was fascinating to hear from Stewart Binnie, the newly appointed executive chairman of struggling retailer Jaeger, that the biggest decision he took when considering the future of the business – the one that has since had the biggest impact in turning it around – was to say in September that he would only sell at full price.
That’s a scary promise to make for any retailer, especially when it had underperformed in previous seasons and consumers may not have placed the same value on the name as they had in the past.
It seems that particular gamble is paying off, perhaps because of the premium qualities Jaeger has maintained despite its troubles. But for mid-market retailers this may not always be the case. If your product offer looks exactly like your direct competitors’, then be assured that as one of our other Summit speakers, Asos boss Nick Robertson, pointed out, consumers show no loyalty – they will head for the neon Sale signs every time.
Those that have the cojones to hold out until Boxing Day risk losing their customers unless they have an exciting offer that customers feel they can’t get elsewhere. There is a re-education of the consumer that undoubtedly needs to happen, but in the meantime few retailers would willingly sacrifice themselves too much to do it.
Some retailers even told me they want the Government to step in with legislation on Sale periods to get things back on track – but with support for David Cameron shaky at best, I can’t see him bringing in a law that effectively makes clothing more expensive for his potential voters.
So let the Christmas games begin…