Discount merchandising is a notoriously tricky exercise that many Sales and Marketing teams must coordinate bi-annually to clear out of season stock. For fashion retailers, this comes with the seasons, and getting rid of stock is the primary, but not always sole, reason behind Winter and Summer sales. How this translates to ecommerce is a valuable question for etailers to gain a perspective on how discounts drive revenue, loyalty and brand recognition.
Cherry Healy, star of BBC’s recent documentary Secrets of the Sales, took viewers behind the scenes of well-known retailers like John Lewis to show how end of season sales are orchestrated, and the amount of effort and variety of resource that goes into a discount offering. Channel Four’s equivalent docu-drama Liberty of London showed us a different side of sales merchandising, this time for the months running up to the Christmas season. Both programs offered viewers a rare chance to see how major retailers organise their sale merchandising and the difficulties that they face in planning and execution.
Bricks and Mortar Sale Merchandising
As Cherry states, sale merchandising has been a part of retail since at least the 1890’s, and its influence on the way consumers shop has grown dramatically since then. There are many strategies that retailers use, from pricing to product placement, which have a direct effect on not only sales items but those placed strategically around them.
John Lewis has become a leader in end-of-season sales, and their merchandising team purchases ‘special buy’ or specially priced items leading up to their sales seasons specifically to entice customers already shopping for sale items to purchase impulse items at fuller prices.. This tactic is well known in retail, and there are a number of etailers that have taken this model and applied it to ecommerce by building relationships with buyers and offering proprietary pricing on their wares.
Cherry took viewers into a sale merchandising meeting, where mark down prices were set incrementally and a strategy was set out for when and how to mark items down. Interestingly enough, we learned that only 10% of stock needs to be marked down for a store to advertise a sale. This figure, although low, points to the true potential of discounts and sales, which lies in the peripheral full priced items that shoppers are also drawn towards.
4oD's three-part documentary Liberty of London demonstrated a different kind of sale merchandising in their run-up to the Christmas sale season, and followed the famous department store’s preparations for the deluge of Oxford street holiday shoppers. We saw how Liberty’s Managing Director Ed Burstell determined to make Liberty profitable again, whilst sustaining its British heritage and eclectic high-end clientele. The Christmas sale season, on the other hand, showed us a department store that relies heavily on buyers, merchandisers and decision-makers to provide the right amount of stock, and anticipate the best and worst case scenarios in shopping behaviour.
Of course, running a 140-year-old business in the confines of a heritage Tudor building has its downsides, and the merchandising team there has to work to overcome those obstacles at each turn. Ecommerce sites can bypass these concerns entirely, and still be able to use the same buying and merchandising strategies.
How Sales Affect Consumers
Sales not only have an effect on mass consumerism, they also have been shown to affect us each individually. The senses play a large part in how we buy into a purchasing experience, and retailers try everything from engaging or pacifying smells, to music, lighting and fitting room mirrors in order to engage customers to buy more. Bricks and mortar stores have the upper hand in this regard, but there are many ways that ecommerce sites can use neuromarketing to uplift AOV through sales.
There is something inherently stimulating to consumers about getting something on sale, and getting more for less. This actually affects our brains in a variety of ways by increasing our heart rate and stress levels, which gives a feeling of elation. Everyone who’s been near a sales rack has had the feeling before, and the same goes for those of us who shop online.
J.C. Penny, the American low-cost department store, recently reverted back to it’s sales discounting policy, which it has dropped in lieu of a campaign for ‘Everyday low prices’ and eliminating sales discounts save seasonal offers. They saw a drastic drop in revenues and footfall due to the new approach and decided to return to mark-up to mark-down discounting year-round, with a positive uplift since the move.
All of these tactics have proven that bricks and mortar retailers have a variety of ways to merchandise and engage customers during seasonal sales and discounts. However, etailers have a better perspective in that they can take all the best principles of sale discounting from traditional stores, and perfect them using metrics, tracking and analytics.
How Etailers can Maximise Sale Merchandising Potential
While Cherry Healy may have taught us that we should never buy a full-priced sofa, she also demonstrated how sales discounts affect purchasing decisions on an emotional level. There are a number of ways that ecommerce stores can capitalise on the emotional responses of website viewers. For instance, Neuromarketing tactics that you can use in the run-up to sales include testing your website with eye-tracking software or A/B tests, which will allow you to see what aspects of your site are getting the best click-through rates. Putting in place proper tracking for your website users behaviour, and analysing their responses, is another way to maximise a sale's potential effect on customers.
When revamping your homepage for a huge sale season, like the winter sales going on now, keep in mind these tactics:
- Use Colour
- Build Urgency
There are a number of ways to build urgency and steer viewers down the conversion funnel. Urban Outfitters does a great job in using many of these principles, such as displaying the original price next to a red sales price, as well as marking when certain items are Online Exclusives or Just Added.
- Special Buy Deals
Ecommerce merchants have the opportunity to leverage their relationships with buyers to offer special buy items as well. Here Occa Home displays Special Buy furniture directly underneath sale items, and within the sales section to maximise buying potential.
- Categorization and Pricing
Taking the time to build the right categories for sale items and making sure that the correct pricing is in place takes merchandisers considerable time and effort. However, the results can make the purchase path a lot quicker for customers, and drive more purchases. Victoria's Secret is the best site for sales categories, and their semi-annual clearance sale displays many different and engaging ways to segment items down, making it one of the easiest and enjoyable sales shopping experiences.
Using web analytics to track your users' behaviour is a given for any Ecommerce team if you want to know what happened after the coffers are filled up and the sale signs are taken down. Going beyond simply tracking website users, to linking up this data with sales figures and inventory is a long and exhaustive task for many Marketers and Merchandisers. Figuring out what sold, how much, and where those customers came from can be a meandering path of reports and Excel sheets. However, it's still an important ritual that must be completed to get a full picture of a given sale's success.
Setting in place the right tracking and analytics software is the difference between guessing that the merchandising worked, and knowing that a particular blue jumper sold out in five minutes on Black Friday, and was mainly shipped to the US. This kind of information can make or break an ecommerce retailer in a quickly saturating market, and is an indispensable tool for developing merchandising strategies for future sales.
Online retailers have it easier in many ways than traditional merchandising teams, mainly because the data is available to track how customers behave and a multitude of ways to grab their attention. Keep in mind that each business will have different tactics and limitations to their sale merchandising, and the tactics outlined above are only the beginning. For more information about how you can make the most of your merchandising and know your customers better, check out our new Customer Lifecycle Marketing Kit: