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Retailers’ fury at discount culture

Retailers have hit out at the “aggressive” Sales run by competitors amid continued tough trading and sluggish consumer confidence.

Figures this week showed that discounting across clothing and footwear continues to be prolific, with promotions leading to double-digit rates of deflation since the start of the year. Figures published this week by the British Retail Consortium and Nielsen show that April’s rate reached 11.3% – a deceleration on March’s 12.3% rate, but higher than the 12-month average of 9.8%. Much of this has been attributed to discounting.

A number of retailers are running promotions to drive footfall, with Liberty giving customers £30 off when they spend £150 or more, Debenhams set to offer 20% off women’s and girls’ dresses from May 8-13, while Asos ran a 60%-off spring knitwear promotion for 24 hours last Saturday.

The chief executive of one womenswear retailer told Drapers that trade was “very variable” at the moment, adding he was exasperated with the discounting, particularly at Asos.

“We are trying to sell full price but clearly customers are still stimulated by promotions and markdowns. Asos in particular has been very aggressive with its sales, running 20% to 25% discounts.”

The chief executive added that he would have to reconsider selling its product through Asos if it continued with such regular promotions. “You can’t have two opposing strategies,” he said.

Patrick Grattan, owner of agent Bluefield Trading, agreed: “It’s getting more and more like the American system where there really is no discounting structure. The big boys [brands] are the worst culprits; it really is affecting independents very negatively.”

The global head of one premium high street retailer added: “We’re being told that things are getting better but it’s not quite filtered all the way down to the consumer. They’re still being pretty canny, maybe not as much as they were, but that’s why retailers are using discounting tactics to entice them in with an offer.”

Honor Westnedge, senior retail analyst at Verdict Research, said retailers were becoming “cleverer” with their promotions.

“Following a heavily discounted Christmas period, this year retailers are becoming much more strategic. Discounts are online or in-store only, or at certain times in the evening.”

Despite what appears to be a constant stream of promotions across the high street, many retailers have vowed not to join in with the discount culture.

Matt Horstead, owner of menswear indie Dartagnan in Chichester, West Sussex, said: “With the discounting, I always think ‘should we join in?’ But we won’t do it. Do it once and you’ve got to do it again.”

The head of the premium high street retailer said: “We tend to hold our ground a little bit to protect the brand more than anything. It’s very easy to do a knee-jerk reaction [to promotions]. But it works both ways, there’s only so much money in the system so you’ve got to be careful – if you leave it too late you miss a bit of that purse.”

Readers' comments (12)

  • It's really tough trying to sell designers who are so sought after like J.W.Anderson, Sophie Hulme etc at full and fitting RRP when it's possible EVERY day to get 25-30% discount from players like My-Wardrobe. Whether it be a Flash Sale or a Bonus Discount Day or a VIP Discount there is a continuous discount. This needs addressing by the brands themselves and not always laid at the retailer's door.

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  • The brands are in total collusion with the retailers with regards to discounting, however demented, short sighted and damaging it is. Some brands actively encourage their stockists to discount.

    Its very bad retailing, encouraged by very badly run brands.

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  • Agree with the comments, it is a road to disaster. Look at the bigger picture did Next go on sale early no ,did Debenhams suffer yes! Was shocked to see LVMH on Secret Sales !
    Why do they do it ,short of cash buy less! some people never learn by others mistakes!

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  • darren hoggett

    Discounting product is an admission of defeat and a sign that you're not good enough. There is no art is selling something below its value - anyone can do that.

    Darren Hoggett
    J&B Menswear Limited/Norwich

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  • ‘The BRANDS are in collusion with the retailer to promote their products!’ …. Really…. Most brands that I know and have worked with hate to see their brands on promotion the fact is that it is ILLEGAL to even enter into a conversation with any retailer about pricing as it’s deemed as price fixing and could face legal action from the retailer. The only brands that can flex their muscles are power brands that the retailer cannot afford to lose and that is why you will see certain brands on sale and certain brands not! The only option for brands it to review their distribution policy and weigh up whether they can afford to lose some of the stores that are mentioned above. It’s not always an option for a small brand… As for LVMH on secret sales, they probably bought the inventory from a third party somewhere in Europe and not directly from LVMH.

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  • MY Wardrobe now seems to be a flash sale site. When did that happen?

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  • Brands need to decide if they are happy with
    6 or 7 e taillers and a department store chain
    As their total uk distribution because this is what they will
    Be left with unless they can protect indie margin.
    Also some hypocrisy here , Jules B and others castigated
    My Wardbrobe and Coggles for in season discounting over
    The last two years , check them out , 20% off
    Certain Sp14 lines as we speak , others like Van Mildert always offering discounts to people on there database,
    It's becoming a race to the bottom , just look at
    The sports trade for a vision of tomorrow unless
    Brands act

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  • Thierry BAYLE

    There can be different reasons why retailers start discounting goods. If we exclude the one to gain traffic, it is because they are over stocked and therefore the question becomes why are they overstocked.

    Do they forecast sales accurately every month for each product classification?
    Do they understand how to better manage the stock to sales ratio in every class? ...
    Working alongside Brands and Retailers and delivering the open to buy plan every month, I can confirm that some organisations are over optimistic in their buying, fail to track sales and stock in the right product classifications and do not have a sales targets per class per month to ensure stock is moving out in a balanced way.

    Thierry Bayle

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  • I work for a brand and there is nothing we hate more than stores discounting in season and would love to stop them doing so. However as someone has pointed out above, it is ILLEGAL to discuss pricing with retailers and unless you're a huge power house brand, you don't have much protection as to how your brand is sold.

    We should move towards how some European countries work, in the fact there is a date set by the government that retailers can't go in to end of season sale before and only give a two week floating period mid season for discounting.
    This way, everyone is on a more level playing field and consumers won't come to expect continuous discounts all year round. That's the problem we are in now, we have too large a discount culture and we also need to train end consumers to think differently and not fuel it.

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  • In relation to the last comment, in my experience only weak reps that have no balls use the 'it's illegal' routine. What use is a rep you can't talk to? They are not keeping a rein on their particular area much to the detriment of all decent retailers.

    Most reps and agents will happily talk about pricing, even though their hands are officially tied, as there are other ways and means to affect accounts that disrespect a brands position and integrity.

    There is a worry that brands are increasingly going for numbers, while giving the stance that they have quality distribution. If a brand is run well, it generally will not be discounted. Problem is, not many brands are well run so we find ourselves in the situation we're in.

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