Bringing Back The Full-Price Sale

0, 0
0
634

Retailers are trying to figure out ways to get back to full-price sales, which is an increasingly important step as retailers and brands prepare for how to adjust pricing in the wake of tariffs. And there is a visible shift from discounting as a major driver in purchase decisions for the majority of Americans, and toward quality. As Richard Flaks, SVP International and Strategy at Chico's FAS said during a panel discussion at the last NRF Big Show, "Customers will pay for what they want."

Lululemon's earnings success is attributed to its no-discount policy. Brands like Michael Kors Holdings Ltd. are taking steps to be in the same position, scaling back on wholesale distribution and tightly controlling inventory to cut down on discounts.

Recent studies conducted by Forrester found that 52% of the weekly or monthly retail promotions go to customers who would happily have paid full price. It's also worth noting that three out of four millennials are willing to pay more for sustainable offerings according to Nielsen.

However, going after the full-price sale leaves very little room for error. Retailers and brands must make sure they bring a differentiated product to market that customers are willing to pay for. And that requires speed, the right assortment, and the expected price, the first time. And thanks to continued innovation, the retail industry has more tools than ever at its disposal for getting there.

Here are a few technologies helping retailers to capture more full-price sales. Insights gleaned through interpretation of data will be key to price optimisation:

Also Read  Virtual Marketplace: Big Opportunity Awaits RMG

RFID

RFID technology is growing in popularity as it can hold and collect more information about products, such as size, price, colour and location than traditional bar codes. As these systems move to the cloud, the information is available more readily and in real time, offering invaluable insights on consumer preferences, which are necessary to increase full-price sales. Macy's, lululemon, Rebecca Minkoff and Walmart are a few retailers implementing RFID technology.

Interest-Free Layaway

Tools that enable consumers to pay in increments over time rather than charging a card are also growing. Afterpay, a digital platform that offers interest-free installment plans for online purchases, recently announced its launch into the US. The company says that enabling shoppers – particularly debt-laden consumers such as millennials – to receive products immediately and pay for them in a series of interest-free installments (rather than racking up more debt on a card) increases a retailer's ability to capture more full-price sales. Urban Outfitters, Anthropologie & Free People have already signed on.

AI

Retail is undergoing an AI-driven revolution, with predictions of applications and services in the market reaching US$ 27 billion by 2025, up from US$ 713 million in 2016, according to the Artificial Intelligence in Retail Market Report 2018-2025. According to this article, more than a third of Amazon's sales are now driven by AI. As retailers look to increase margins, AI platforms are being adopted to help make business decisions based on visibility into massive data sets. For example, AI can identify which customers have affinities toward certain products and determine whether a customer is price sensitive or if that customer will happily pay full price. It can direct advertising dollars towards the full-price audience rather than hitting a broad swath of people who may have a low likelihood of buying or who expect discounts.

Also Read  6 Things Textile MSMEs Must Do Now To Emerge Stronger From Lockdowns, Future Uncertainties

In May, H&M announced plans to adopt AI and big data capabilities to evaluate purchases per location – and ultimately to stock inventory based on these insights. By allowing automated machine learning to allocate or replenish inventory, retailers will no longer need to rely on seasonal, margin-draining markdowns.

Voice of the Customer

Today, Voice of Customer analytics are increasingly being used to gather real-time preference, pricing and sentiment data on products as early as the design phase. A recent survey by global consulting firm Kalypso, Indiana University, and PI Apparel reported that 84% of retail leaders believe that Voice of the Customer analytics are important and more than half (59%) are investing in it now or in the next 12 months.

Retailers who want the greatest chance of selling items at full price need to start tapping Voice of Customer data to shape collections and ensure they are presenting customers with the best products at the price they are most willing to pay. Further, when paired with product data, which most retailers have been collecting for years, they can more effectively predict the correlation between speed-to-market, demand and sales. Retailers including Chico's, Justice, Marks & Spencer and Marimekko are examples of retailers using Voice of Customer analytics.

Also Read  Inside Amazon’s Department Store Plans: High-Tech Dressing Rooms, Its Own Apparel Brands

Continually discounting items is not sustainable. We've learned this by watching countless retailers and brands suffer as Amazon and off-price retailers reap the benefits. To grow, retailers need to put an end to their margin-draining discounting practices by bringing better quality items to market at a fair price. Technology innovation is providing the ability to capture and analyse customer data in a way that is meaningful and aligned with consumer expectations. As consumer mindsets shift away from discounting and toward quality, retailers that are able to do this effectively will not only survive, but thrive. And those who don't will be shuttered.           

LEAVE A REPLY

Please enter your comment!
Please enter your name here