Traditionally at this time year apparel retailers are in full summer sales mode. But with customers more likely to purchase in line with the weather than ever before, and the delayed arrival of northern hemisphere summer, would retailers risk competition and alter their merchandising calendar? Of the 1,030,083 UK & US apparel products currently on the market and in our commercial database, 37.1% are currently on discount. Furthermore, of those discounted, 20.4% have been discounted by more than 50%.
Over-arching stats like that are interesting, but the real wealth in data comes when we drill down into specific brands and retailers to understand if, and how, their pricing strategies have shifted. We looked at successful online retailers across the breadth of the market to understand the trends in promotions and discounting.
Historic data shows that H&M have larger sales in early December than in the summer season. They’re later into sale this year, with the first round of reductions occurring on the 10th June, then further price drops on the 1st and 15th July. That’s compared to the 7th, 18th June and 1st and 19th July in 2012 – so competitors would perhaps be wise to look out for a fourth date of discounting from H&M this year.
Although not the first retailer in this study to go into sale (Forever 21 were), H&M were first to update their homepage merchandising on the first day of price slashes, gaining 8 days on Forever 21’s homepage update. H&M haven’t emphasised their sale via email newsletter however, only referencing it a couple of times.
Despite their average price being double that of H&M’s, Zara have a similar level of discounting. Of that, 25% is reduced by more than 50%, however Zara have been later into sale than they were in 2012. Their first major round of discounting occurred on the 5th July this year, compared to the 30th June in 2012. A second wave of discounting took place on the 11th July, but compared to historical data, that appears to be the last of Zara’s sales activity; in 2012 no further discounting occurred in August or September.
Despite their position as a value retailer, Forever 21 currently have the lowest level of discounting, with just 32.5% of their current offering having seen reduction. Their average price of £10 perhaps goes some way to explain why there are only 2.7% of discounted products which have seen reductions higher than 50%. Forever 21 must maintain their year-round value by operating to close margins, although H&M find ways around this. The sales period has started 18 days earlier this year for Forever 21 but is less dramatic – in 2012 the retailer discounted around 2,000 products on the first day of the sale, with little movement there after. This year the discounts have been small in scale but more frequent (movement on 500-700 SKUs only). There was a large increase in price drops in late August 2012, which suggest Forever 21 may do similar this year. They strongly promote their sales, with 8 email newsletters so far this sales season – the highest number of any retailer in this study.
Demonstrating that there isn’t direct correlation between a low average price point and a high level of discounting, Whistles, with their average price point of £67.50, were the retailer with the 3rd highest rate of discounting – with 50.2% of their current online offering being reduced. They also had the second highest level of discounted products with prices slashed more than 50%. Whistles went into sale a week earlier this year than in 2012, kicking off mass discounting on the 14th June. In 2012, the 18th & 19th July were the dates with biggest reductions, so there could still be more to come from Whistles this year.
They’ve also dramatically increased how they promote their sales, shifting from 3 email newsletters in the 2012 summer sale period, to 7 thus far this season. Earlier sales, more aggressive promotion and a larger ratio of reduced stock suggests the premium retailer has adjusted its sales tactic this year.
ASOS have 42.9% of their offering on discount currently, with 12% of that being reduced by more than 50%. They went into sale on the 24th June, which is 2 days earlier than in 2012. Their current discounting is the largest in 12 months, but in 2012 there were big reductions on 16th August, so competitors should look out for further movement from the online apparel juggernaut!
Net-a-Porter are running to clockwork with their sales season, kicking off discounting on the same day as last year; the 17th June. Summer 2013’s sale section has 25% fewer product lines in it than 2012’s. Net-a-Porter’s visual merchandising is in sync with their pricing; their homepage was updated on the first day of reductions. Like Whistles, Net-a-Porter have sent out 7 email newsletters promoting the sale so far this season, compared to 6 last year.
It’s easy to be swayed by scaremongering industry news stories which declare ever-increasingly competitive sales seasons, but drill down into data and you can see that each retailer still has clear tactics unique to them. Yes, three of the above retailers went into sale earlier, but for many those reductions were across fewer products, and two key retailers (H&M and Zara) went into sale later. Premium and luxury brands, who have a reputation for being more subtle in their sales, sent as many, and in some cases, more email newsletters to promote their discounting.
We can also identify the gaps in retailers’ sales tactics, the missing homepage updates, the ‘surprise’ late season reductions or the lax approach to newsletters, meaning that competitors don’t solely have to compete on price. The lesson here is to know your competitors, understand their tactics, and ignore the sweeping headlines.