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GUEST COMMENT The recipe for the perfect sales strategy

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by Sarah McVittie

In recent months the biggest names in UK retail have reported financial results whose health was dependent on their performance in seasonal sales. To establish what underlying trends define whether a winter sale turns out to be a hit or a miss, Dressipi has examined the sales activity of more than 90 UK fashion retailers, analysing when they went on sale and the level of discount applied. The resulting insight has enabled us to define a Recipe for the Perfect Sales Strategy.

Discount early

Many analysts have attributed John Lewis’s exceptional Christmas performance to timeliness, after it brought its highly publicised online sale forward to Christmas Eve. In fact their serious discounting started in early December, with 2,366 items on sale in womenswear alone. The same also went for other major players: Debenhams offered discounts on 3,140 garments and House of Fraser cut prices on a staggering 6,328 in the week commencing 10th December.

By contrast, French Connection, which recently reported disappointing numbers, admitted that it had waited too long to put its stock on sale in a bid to “build brand equity”.

Retailers that reported the best sales performance tended to be the first to go on sale. They used discounting to drive a spike in the all-important pre-Christmas sales activity to the point where many consumers were already spent out by the time their competitors went on sale.

Discount often

The fashion retailers that made clever use of discounting levels won extra leverage in the earlier winter sales. ASOS, which used its own most recent financial results to talk about a new lower pricing strategy, began its sales efforts with an average 20% discount on more than 4,000 lines in the week commencing December 10. This jumped to 45% and 47% in subsequent weeks. Reiss kicked off its sales activity in the same week with an average 26% discount before raising this to 43% and almost half of all stock just before Christmas.

With today’s longer sales season retailers can experiment with discounting. Astute retailers know by lowering prices even by a relatively small amount at key periods they can persuade some consumers to buy now rather than wait for further discounts.

The perfect sale is an event

Thanks to Mr Selfridge, department store retailers know that for a sale to be a success it needs to be an event. Think of the buzz surrounding the Harrods sale. For over a decade the high street heir to the Knightsbridge Boxing Day queues has been Next, whose post-Christmas sale attracts millions of shoppers, while many online retailers and marketplaces like eBay see their biggest surges in consumer traffic on Christmas Day.

The retailers that reported the most disappointing Christmas performance tended to be those whose sales got off to a slow start or felt perfunctory such as French Connection. M&S had only discounted a mere 19% of its womenswear lines by the week commencing 24 December. By contrast Reiss and ASOS had both discounted 70% or more of their womenswear by the same week.

A successful sale needs to be positioned as a key event in the shopping calendar, making consumers feel like they’re getting something special. Marketing and promotional activity should reflect this. It’s an ideal tactic to get consumers to buy more than they would normally or splash out on more expensive items.

Be perfectly multichannel

Familiar high street names are now just as adept at exploiting e-commerce opportunities as their online-only counterparts. Debenhams’ most recent results directly alluded to a 39% surge in online shopping supporting the business’s overall growth, while year-on-year online growth at House of Fraser climbed by 48%.

Successful retailers are fully aware of the importance of ecommerce, but they also know a multichannel strategy gives them extra leverage. Physical retailers are ideally placed to make use of click and collect services, which worked well for John Lewis and even catalogues, as the 11.2% growth of Next’s Directory business attests.

Sales are your way of engaging with ‘the new normal’

According to recent TUC figures the average UK worker has lost £4,000 in earnings because of low wage inflation since the recession began in 2009, leading to a drastic drop in disposable income.

In these straitened times, it has never been more important for retailers to demonstrate value to consumers by giving them a good deal, whether it takes the form of aggressive pricing strategies, first adopted by the supermarkets, value retailers like Primark and now ASOS, or by making sales an unmissable occasion bringing new or infrequent customers into the store or on the website.

Sarah McVittie, co-founder of Dressipi is speaking in The Customer Journey conference at IRX 2013 today.

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