In today’s InternetRetailing newsletter we’re reporting as the retail industry heads towards Christmas offering record levels of discounts. Deloitte predicts that, for the first time, the average discount, tracked online and in-store, will already be above 50% by Christmas Eve. Meanwhile, the latest IMRG Capgemini Online Retail Index shows the strongest online gains in November since April 2018 - driven, no doubt, by strong levels of discounting. These are the lead stories in today’s Peak 2019 round-up – and may well raise fears that cutting prices is the only game in town to boost sales this week, at the likely expense of future profits.
We have analysis on that subject in today’s guest analysis, with advice on how brands and retailers might approach discounting this Christmas from MediaCom’s Jenny Carrick and Mark Wallace.
But while it seems that most retailers will discount to sell this Christmas, a season that has been dogged by political uncertainty both around Brexit and the general election campaign, fresh clarity on both of those fronts – with the Conservative majority set to leave the EU by early 2020 – may mean the discounting we’ve seen this year proves to be something of a one off.
Certainly, longer-term many traders are aiming to move away from cutting prices. Sports Direct this week rebranded itself as Frasers Group – a name that it considers more upmarket and in line with its new thinking around multichannel “elevation” rather than its previous ‘pile them high, sell them cheap’ approach. At the same time it’s focusing on how to give brands the in-store experience that is part of maintaining prices.
Mothercare, which put its UK business into administration this winter because the culture of discounting meant that its shops were no longer financially viable, has said it will continue to sell through UK stores – those of its new UK franchise partner Boots. And Studio Retail, which is transforming itself into a digital-first value retailer, says that while it had its strongest Black Friday yet, it sees no need to “chase promotional trends” in order to keep selling. Rather, its customers, it says, look for value all year round.
Today we also report on how Misguided successfully cut costs to boost profits, but missed out on brand awareness and sales at the same time.
Finally, our guest comment, from Sandra Loeffler of Nielsen Marketing Effectiveness, argues that while store closures and job losses may have dominated the news for the better part of the last two years, a look past the headlines reveals an industry in transition.