SALE! The Holiday Race to the Deepest Discount.

by / Monday, 02 December 2013 / Published in E-Commerce, Featured, Strategy
The holiday weekend stats you need to know (so far):

– Compared to last year, the National Retail Federation reports more people went shopping in stores. 141M vs. 139M. They (we) spent 3.9% less.

The story online and in mobile:
ComScore is reporting that Black Friday was the season’s first billion-dollar day in desktop online sales. $1.198B to be exact. Up 15% from 2012.

– According to IBM, 39.7% of all online traffic was mobile. Mobile was 21.8% of total online sales. This is a 34% increase over Black Friday 2012.

For the record, I’m cheering for digital and mobile to excel but that’s my misapplied competitiveness. How much overall money is coming out of our wallets, independent of device, is what really matters.

Cyber Monday results are our current cliff-hanger. (Btw Cyber Monday is a name so outdated we should have to access it via flip phones and dial-up connections.)

Given the deep discounts, all indications are that consumers are able to stock their stockings twice this year. We are in the midst of a full on fire sale. Large font. Exclamation points. Deals that defy time constraints.

There is a retailer panic that feels palpable. A race to the deepest discount. Prices are fluctuating in a way that makes the value they reflect seem shaky.

This holiday we’ve become a barter culture without the need to negotiate.

Three things I think about this:

1. Retail is crying wolf.
Deals are no longer held to Black Friday or Cyber Monday. You think the deal is expiring and then it lasts all week. Black Friday was not the first time this season that Levi’s had 40% off everything.

For consumers this is good. But it undermines trust. If Banana Republic has consistent 40% off sales why would I ever buy full price? Do people feel excited or duped if J.Crew’s 30% off continues unexpectedly through the weekend?

2. The peer pressure is worse than Jr. High.
Amazon competes on price in a way that has altered the game. Wal-Mart does too but the attention on them is now diluted. The retail industry currently caters to the assumption that lowest price is the end all-be all. It is fear-based, defensive and rough. And very real.

3. A hangover awaits.
Gap’s CEO Glenn Murphy, on a recent analyst call, said that customers are sick and tired of being bombarded by sales. “…have we – I’m just being honest – as an industry not been that innovative in order to give the consumers a value proposition that doesn’t look like wallpaper day in, day out?”

Gap’s discount on Black Friday? 50% off of everything.

I like though, the gauntlet he throws. It’s going to take nerve to find solutions other than price. But finding solutions must happen.

I recognize it’s easy to be critical. Constructive criticism comes with proposed solutions. Here are three from me:


1. Make it an exchange.
Right now retailers are giving (away their margin). Consumers are getting (huge discounts). For retailers, getting business is a win but I’m hoping for more.

Let’s move from a one night stand to at least a second date. Get an email address. Ask for an Instagram photo. Leverage tweets. Every purchase holds the potential for a trade vs. a ring-and-run. We, as consumers, should have to work harder to get 50% off.

2. Curate flash sales.
Utilize the limited time frames, countdown clocks and capped inventory that excel on eBay, QVC and HSN. Don’t put everything on sale. Amazon is using this tactic right now. It curbs the crazy.

Also I’m convinced there are people who will buy without a huge discount. Let’s give them a shot to prove it.

3. Give alternative reasons to buy.
Price is the least common denominator. Granted, a powerful one. There though, has to be other options. The uniqueness of an etsy or Fab.com product, the monogramming on an L.L. Bean bag, the Method rally of David vs. Goliath, the style inspirations behind J.Crew, the positive impact of a Tom’s or Warby Parker.

Patagonia is getting people in-store with their anti-buying, repair your Patagonia gear “Worn Wear” holiday campaign. Yes, getting people in-store makes them likely to buy. (Hello the popularity of order online, pick-up in-store.) But this stands out as an innovation. One that doesn’t scream sale.

Will these tactics trump price? Perhaps. The point: Digital commerce has brilliant creative minds that can take on the price wars from the top ropes. Price is the easy way out. It’s like dropping F-bombs throughout a comedy routine. It works, but we can be better.

Do these ideas solve it? Of course not. They merely scratch the surface. But let’s get the conversation started. I think the CEO of Gap is spot on.

Consumers are now expecting 40-50% off next holiday season. Worst case, the sales have them questioning the value of what we sell.

‘Tis the season. But this is not sustainable.

Cheers,
Amy

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