- Read industry leaders’ views on why discounting is a problem
- Complete our survey to help us gain insight into discounting strategies
When we published an article a few weeks ago on the state of the fashion industry (Fashion industry at “crisis” point, Drapers, April 8), we were inundated with comments from our readers, many of whom argued that the vicious cycle of discounting was largely to blame. We have gathered some of those views, which you can read below.
Every retail business has its own discounting strategy, of course, and it is a much-needed way to stimulate sales and clear stock. But many retailers have fallen into the trap of discounting too deeply and too often. The result is that consumers are being trained to buy only when prices are reduced – and they expect bigger and bigger discounts. It is a cycle we must break to save margins and drive the industry back to full-price sales.
Some retailers have eschewed the continuous discounting model. Next is famous for taking a stand and only going on Sale twice a year, while Jigsaw last year made a public declaration about the danger of taking part in Black Friday, warning it almost entirely wipes out pre-Christmas sales. Now it is time for the whole industry to pull together to wean itself off the discounting drug. These are challenging times: the cost of doing business is rising and we can neither rely on the weather nor general consumer confidence. But retailers must show customers the value of high-quality product, excellent customer service, and a compelling and seamless shopping experience across multiple channels – not just price.
To investigate what is driving the discounting culture and possible solutions, Drapers is launching an online survey of fashion retailers and brands across the UK. We want to understand how often retailers are on Sale, and how and why discounting strategies are changing, with a view to sharing and encouraging best practice across the industry. It is a short survey and you can remain completely anonymous. Please take 10 minutes to complete it.
Take part in our discounting survey
How often do you go on sale? Has your discounting strategy changed this year and if so, why? What are your views on discounting in general? Help Drapers to gain a better insight into how retailers and brands are using discounting, the impact it is having on the high street and what changes could and should be made by taking part in our anonymous survey.
The results of the survey, which closes on May 27, will be compiled into a report and used to share and promote best practice across the industry.
Please note, the survey is for retailers and brands. If you are from another part of the fashion industry, a related industry or you are a student, we would love to hear your views on discounting, but please email them to us at firstname.lastname@example.org rather than filling out the survey.
Our experts’ views on discounting
- Don McCarthy, former chairman, House of Fraser
- Anthony Thompson, chief executive, Fat Face
- Steve Cochrane, owner of premium Middlesbrough independents Psyche and Psyche 2
- Charles Clinkard, owner of 33-store eponymous footwear chain
- Angela Spindler, chief executive, N Brown
- Peter Ruis, chief executive, Jigsaw
- Erica Vilkauls, chief operating officer, Thomas Pink
- Bryan Johnston, senior external affairs adviser, British Retail Consortium
- Nish Kukadia, chief executive, SecretSales
- George Davies, founder of FG4, Asda’s George and Marks & Spencer’s Per Una
- John Egan chief executive, The Dune Group
- Fergus Patterson, managing director, Gant UK
- Martin Schneider, owner of premium men’s and women’s independent retailer Accent Clothing
Don McCarthy, former chairman of House of Fraser
The problem with discounting is it has become a part of our retail culture. I call it “Lent” retailing – 40 days on the shelf, then take 40% off. They have that mentality in the US and it is coming to the UK. Retailers complain about it but no one is really trying to change it, so customers are being educated to expect discounts.
How is a retailer going to get out of the cycle with more and more competition? If you stop, it doesn’t mean your competitor will.
The growing cost structure is placing retailers under so much pressure, especially if they have bricks-and-mortar stores. Even if these have been reduced to minimum staffing levels and it can’t be cut any further, there is still the living wage, higher occupancy costs, business rates and increased online sales.
It is impossible to suggest everyone can stop discounting, but there is way of doing clever discounting and promotions. If it is planned properly, it can be very focused, with leeway for seasonal adjustment.
Anthony Thompson, chief executive of Fat Face
We are responsible for the level of discounting and lack of innovation and newness, not the customer. When shoppers are spending more on leisure, we have to ask why they aren’t buying clothes.
Discounting has a corrosive impact and we reap what we sow. The margin for error for retailers is the smallest it has ever been – there’s no forgiveness for poor retailers. But if you have great quality, full-price product with great service, you can gain market share.
Steve Cochrane, owner of premium Middlesbrough indies Psyche and Psyche 2
Most retailers have too much stock, so everyone’s discounting to keep on top of things. But all we’re doing is conditioning the customer to expect a discount.
It’s starting to become a race to the bottom. I read about some of the high street players saying they are doing less of it, but I’m not seeing any evidence of it.
Brands used to police people going on Sale out of season, but they seem to be losing their nerve. They also seem to be relaxing the distribution channels, so a lot of big brands are losing their kudos.
We’ve all got added costs with things like the living wage and the rates bill so we need to be making more margin, not less – it’s crazy.
Charles Clinkard, owner of 33-store eponymous footwear chain
Discounting is the biggest issue we face, and legally we can do nothing to control prices. It is a disaster for the whole industry. If we can’t all make a sensible margin, we won’t be in business for very much longer. Brands need to be able to control and manage price, otherwise they will have fewer customers to sell to and eventually the idiots who discount will cause their demise.
Angela Spindler, chief executive of N Brown Group
There is a skill in getting your value proposition right relative to your competition. We have a policy of having “first price right price”, rather than going down the discounting route mid-season. We invested in our prices last year and I’m happy with where our proposition is now. Mid-season Sales are starting earlier and earlier, however. Value is really important to shoppers and, when trading is tough, especially because of low consumer confidence, offering value as a marketing tool is really effective.
Peter Ruis, chief executive of Jigsaw
Discounting damages the industry and the customer’s perception of fashion. It is not a needs-based commodity like food, so we need to create a sense of quality – there has to be value to what we do. There’s a lot of stealth discounting going on where retailers say they aren’t doing it but they are offering 10% online to new customers. The sheer plethora is bewildering. It’s really hard to pull back [from discounting] when cash flow is a problem, but it can be done.
Erica Vilkauls, chief operating officer of Thomas Pink
By offering a discount what are you saying to the customer? You are saying you do not believe in your product enough to sell it at full price.
Breaking this discounting cycle is a challenge. Retailers should shout about what they do well, and invest the pounds they currently spend on discounting into marketing spend, enforcing a positive product and brand message and reinforcing the equity of their brand.
Differentiation of product is key, as is investing in knowing your customers and what they want from you. That will create loyalty to the brand.
A customer who feels they are paying a fair price for product they really want and which they can only get from you, and can shop in a great environment (on and offline) will remain loyal to that brand – discounting doesn’t come into the equation.
Bryan Johnston, senior external affairs adviser at the British Retail Consortium
Discounting is a vital tool to keep customers coming through the doors and it’s also likely to be the last thing retailers abandon when costs increase in other areas.
However, shifting consumer behaviour, the digital revolution and rising operating costs mean there are fewer avenues for retailers to protect their margins. Unless steps are taken to mitigate this cumulative burden, shop closures, job losses and increased prices could all be on the cards.
George Davies, founder of FG4, Asda’s George and Marks & Spencer’s Per Una
There is simply a lack of imagination in many cases – not just on the high street but online too. For some, the only way they can think to make sales is by discounting. It’s weak management to think it is the only route: it is a short-term remedy. And it creates a public that are trained to want discounts.
John Egan chief executive of The Dune Group
The industry has itself to blame, as we are the ones who have created this culture. The retail world is full of winners and losers, and the ones that don’t try something new won’t survive. By focusing on and investing in technology, great stores and fantastic product, you can build brands that will survive long term and at full price.
Fergus Patterson, managing director of Gant UK
Saying the industry is at crisis point is slightly overstating it, but it’s clear there is a lot of uncertainty at the moment and there are a few contributing factors: fall in tourism, particularly from China, and Brexit. It is tough out there and, if retailers haven’t responded with sensible buying of stock, there will be discounting. There is certainly more evidence of mid-season Sales on the high street than normal.
We are cushioned because we are a brand, but that is not to say that we don’t promote. We do targeted discounts on selected items where we have overbought or weather has suppressed demand rather than taking 20% off everything. We try to avoid blanket discounting and stick to two Sales a year, with some targeted promotions to encourage sales. Ongoing discounting just encourages customers to expect it.
The way back to full price is to put the value back in through the quality of goods and the overall experience.
Martin Schneider, owner of premium men’s and women’s indie retailer Accent Clothing, which has stores in Leeds and Bradford
As an industry we have managed to educate everyone not to pay full price for anything over £40. My son served someone who tried on 20 pairs of jeans and he kept hold of two or three and when we started taking them to the till, he actually said to his face ‘oh no, I’m not going to buy them here, I’m going to get them cheaper online’.
It’s not about the best stock, the best service and a great experience in store any more. It’s just about price – and someone will always sell it cheaper. It has changed so much in the last three years. Even when we are on Sale, unless it’s 50% off, no one is interested.
There are two main problems. One, we’re selling summer gear in winter and vice versa, so brands are delivering stock too early and we’re about six to eight weeks out of kilter with the seasons. Second, it’s the discounting. I’ve tried holding out when everyone goes on Sale but no one comes into the shop.
I’ve been doing this for 32 years and I’ve never known it like this. Only the strong will survive.
Nish Kukadia, chief executive of SecretSales
We are geared up to manage discounted stock and we operate at lower margins than other retailers. However, the way we are organised means we can cope. When full-price retailers jump on the discounting bandwagon to try and get customers to stay loyal, it doesn’t make sense. We need to ask why customers aren’t being loyal to these retailers in the first place.