Nearly 50% of all products on the market within the fashion industry are now discounted – but at what cost?
As Jaeger becomes the latest casualty of the tough trading conditions rocking the UK retail industry, Edinburgh-based Mallzee has today (Monday, 17 April) released figures highlighting a dramatic shift in focus across the entire industry.
The first three months of 2017 saw UK retailers discounting 48% of all products compared to only 27% in the same period in 2016.
Mallzee data also shows that although the average volume of products being sold at a discounted price has increased dramatically in 2017 compared to the previous year, the average level of discount has actually dropped very slightly from an average discount of 44% in 2016 to an average discount of 41% in 2017.
Discounting as a means of increasing product sales has become more common in recent years with reports in 2016 suggesting there has been an estimated 40% growth in the level of discounted fashion and footwear. But is discounting the best solution? Discounting as a strategy can devalue products with consumers expecting to only pay reduced prices.
It has been reported that Jaeger had been discounting at a much higher level than the 48% average figure with something like 75% of their products reportedly discounted in recent months. Yet they aren’t the only high street retailer adopting an aggressive discounting strategy, Mallzee trend data has highlighted other retailers who have jumped from modest levels of discounting (approx 5%) for the first three months of last year to 80+% this year!
There has been much comment on the state of the UK fashion industry and the pressures currently facing retailers – the commonly termed ‘Perfect Storm’ referring to all three cost variables increasing (product, staffing and store costs) whilst at the same time there is a reduction in consumer confidence and thus spending. (The British Retail Consortium reported a 0.9% reduction YOY in February alone.)
Given this ‘Perfect Storm’ how sustainable is discounting as a retail strategy?
Cally Russell, Founder and CEO Mallzee, said: “With 150+ retailers full ranges featured in Mallzee we are in the privileged position of being able to spot trends in retailer habits quickly. This dramatic increase in discounting appears to correlate to all the recent warnings on the state of our high streets balance sheet. I just worry that discounting is a short term sticking plaster solution and that Jaegar and BHS will prove to be only the tip of the iceberg.”
“The development of our Product Intelligence dashboards gives retailers another more sustainable option – using technology driven data to better understand customer preferences in real time, helps retailers avoid the reliance on discounting and instead maximises profitability via smarter customer centric marketing and merchandising.”
In January 2017 Mallzee launched Product Intelligence and Product Future, B2B dashboards which harness the millions of product interactions daily, across the hundreds of retailers in the Mallzee personalised shopping app to help retailers make data backed marketing, merchandising and product pricing decisions.
Product Intelligence highlights how every item within a retailer’s product range is being rated compared to industry standards overlaid with demographic details such as age, location and gender, while Product Intelligence Future enables retailers to test potential products with Mallzee users in an authentic way prior to placing costly stock orders.
Facts about Mallzee
Mallzee was launched in Edinburgh in late 2012 and brings together 150+ retailers to allow users to find, compare and buy in one handy free app.
Mallzee users swipe millions of product interactions daily
Mallzee founder and CEO Cally Russell is currently one of Forbes 30 Under 30 and fashion bible Drapers Next Generation – Ones To Watch
Mallzee has to date raised £3.1million from a series of investors including the Royal Mail Group and Skyscanner founder and CEO Garreth Williams.
Mallzee has almost 1 million users and well over 300 million product ratings.