Retailers have tightened up their discounting strategies for 2016 after a tough year and an unprecedented level of promotions.
A constant stream of discounting, particularly in the run-up to Christmas, hit many retailers hard in 2015. Last week, research by the Office for National Statistics showed the average amount spent on clothing and footwear fell by 3% year on year in December, while prices fell 0.9%.
Retailers have warned that the discounting culture must be tackled this year, amid what is already a tough retail environment.
“I think it’s going to be a big issue this year,” said one footwear retailer. “Discounting has to stop at some point, otherwise retailers won’t be able to make a margin and survive.
“We price match and, as a result of 70% off Sales before Christmas, we’ve had to virtually give stuff away. Retailers that heavily discount brands will end up not being able to buy them in the future.”
Several retailers told Drapers they are planning to rein in their discounting this year, and instead run a smaller number of targeted promotions.
“We only run a certain amount of Sales anyway but we will be doing less in 2016,” said Moss Bros chief executive Brian Brick.
“Our strategy has evolved. We have pulled back [from promotions] over the past couple of years. We want more focused promotions this year.”
Bernard Dreesmann, executive chairman of the Morleys group of eight independent department stores in Greater London, warned that the retail environment would be “a lot more competitive with the growth of online and discounting in the year ahead”.
He intends to stay faithful to the group’s strategy of running four Sales per year. “Discounting in December is not where we want to be.” However, he said Morleys would continue to price match its competitors.
N Brown chief executive Angela Spindler said the retailer would continue with its strategy of running fewer overall promotions, preferring “more targeted and less blanket” discounting.
“A lot of money is wasted giving discounts to people who would have bought it anyway,” she pointed out. “Understanding shopping habits and motivations is key. People aren’t bored with bargains, but they are bored with being bombarded with things that aren’t relevant.”
Lauren Ferguson, owner of womenswear retailer Sisters Boutique in Falkirk, Scotland, said that, despite a tough 2015, she refuses to hold more than two Sales a year.
“All the businesses that discount pre-Christmas are educating the consumer not to pay full price. All these businesses are doing is signing their death warrant. I’m not a discounter, I am a fast fashion business.”