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Posts Tagged ‘e-commerce’

Picture of shop window display with text Sale on red poster

No More Back To School

As I child, I can remember being marched into the shops for new shoes and trousers before the end of the school holidays.

But British retail is changing. We are more likely to buy our kids school trousers, bags and shoes out of season during the sales, holding onto them hoping that the kids will grow into them just as the new term starts.

Is The Retail Sector in Decline?

The Body Shop is an example of how a once popular retailer has gone into decline in recent years. The Body Shop’s most recent sales results were down 4% on the same period last year, but it’s not alone. Shoppers are no longer following traditional buying patterns. Twenty years ago, we bought winter clothes in the autumn, summer clothes in spring, and Christmas goods in November and December. Now, we wait for goods to be discounted in sales and buy things at random times of the year. Unfortunately, many retailers have failed to keep up with modern shopping trends. They continue to buy in stock according to seasonal cycles and have suffered greatly as a result.

The Rise & Rise of Online Shopping

There are many reasons why the British retail sector is struggling, but online shopping is a significant factor. In the footwear sector, online sales now account for 25% of all sales. Shoppers are no longer walking into stores to buy footwear. Instead, they browse online collections.

Evolving technology plays a part, with online access easier than ever thanks to faster internet connections and the proliferation of online shopping portals. Shoppers can order a pair of shoes from Amazon and enjoy next day delivery using the Prime service. The other factor is choice.

Many high street retailers are locked into traditional seasonal buying patterns. In winter, they stock boots, and in summer, sandals. However, consumers don’t always want boots in winter and sandals in summer. They take winter sunshine holidays and ski breaks in spring, so they want choice. Online retailers offer a much wider range of products because their overheads are low. It’s a win-win situation for consumers, and a mortal blow for high street retailers.

Perpetual Sales Damage Consumer Trust

Discounting used to be a way of getting rid of excess stock, often at the end of a season when new stock was on the way and retailers needed to clear their shelves. Now, customers are more often than not waiting for goods to be reduced before they buy. Discounting has become the norm and every shop on the high street has some kind of sale running every day of the week. This has become more acute since the growth in the UK of Black Friday which has now expanded to cover the whole of November in some sectors. Experts believe regular discounting has led to a dilution of trust between customer and retailer. In other words, we tend to assume goods are overpriced, so we refuse to pay full ticket value.

British retailers also face another challenge with the weaker pound. If retailers pass on their increased costs to consumers, will they continue to buy? ­­­­

How Should Retailers Adapt?

Many shoppers are waiting for prices to be discounted before they purchase. Cheap credit and low incentives to save have allowed shoppers the flexibility to buy months in advance of their actual needs during sales promotions.

The aim is to run regular attractive promotions to keep shoppers engaged outside of the Black Friday and Holiday sales stampedes. The challenge is maintaining profitability during the twin evils of weakened sterling and downward price pressures. Our suggestions for achieving this follow:

  • Hidden tiered pricing (this is a personal favourite). Kellogg’s Cornflakes are an established premium brand. Rather than weaken the brand with discounting, they traditionally prefer to run ‘cut out and keep’ coupons. Time-strapped professionals are less likely to pay attention to this whilst checking out in Waitrose or Sainsbury’s. However, Kellogg’s believe that price conscious consumers are also more likely to have more time on their hands (I can clearly remember my Nan doing this) and will therefore take the time to cut out & use promotion codes. Marks & Spencer’s are still a premium brand. However, a quick Google will show you discount codes seeded across voucher and savings websites, many of which do actually work.
  • Prepare a calendar of promotions to run each month. We regularly see client website data suggesting visitors are bouncing straight back out of offers webpages when no promotions are running. The key is to not destroy your margins by straight discounting but by offering bundled promotions – take a hit on certain items in order to maintain an overall healthy profit.
  • Keep a close eye on the competition’s pricing. There are several internet based services which will alert you of a price drop by your competitors so that you can react if necessary as this will directly impact your sales.


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Recent Comments

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