Blog: The trouble with discounting

Garland_double_headshotIt’s no secret the big department stores and chains have been discounting for years and with the Australian dollar at its strongest the question comes again: to discount or not to discount in order to match prices, especially in the lead up to Christmas? Robert and Phoebe Garland discuss…

Robert and Phoebe Garland run and own Garland & Garland Fashion, a leading fashion agency based in Sydney. which also offers business mentoring & project management of marketing to the fashion industry.

This season will be tough and with fierce overseas online retailing also taking away from our onshore retailers, it’s temping for retailers to panic and start marking down to get those extra sales way before the Boxing Day sales and the usual quiet January period.

Led by department stores and chains, discounting has had terrible effect on the fashion industry; it infiltrates at all levels from department stores to independent retailers and affects manufacturers and suppliers across the board. The continuation of discounting is most insidious as it flags the end of each season far too early. In addition it cheapens brands considerably by basically illustrating the product can’t sell at full price. Christmas sales this year are already starting in December. It would take massive discipline by every retailer in to achieve full margin sales right through until February 1.

Whilst the majors might demand rebates from their manufacturers and might demand sharing the cost of markdowns, the independent retailer does not have this luxury. As fashion agents we hear all the time unless a brand sells really well, quite often retailers will refuse to buy brands in department stores, therefore nobody wins.

Garland_sale_imageThere needs to be a restraint by the department stores and major chains not to kow-tow to the accountants demands for cash flow and instead listen to the merchants within the business and delay the mark down dates until February 1. Then at February 1, have a short, sharp, sweet and genuine sale and move into the new season.

Other solutions include more emphasis by retailers on seeking trans-seasonal goods delivered in six weekly windows and hence possibly taking mark downs on a continual basis rather than waiting for the big bang sale at the end of the season. Also there are some manufactures that give excellent stock service support on their best sellers throughout the season, which is a great way to almost guarantee mark down free sales.

Right now it’s the public who have the trade bluffed, instead of the trade controlling the market. They wait for the “big bang sale” and even demand it now. Discounting has taught the customer to shop on sale, therefore making retailing even harder. Customers are playing the independent retailers off against the department stores, and while the department stores and chains can afford to mark down, the independent retailers cannot afford this loss.

We are interested in your thoughts. If anyone else has any suggestions to deal with this problem, please contact us at info@garlands.com.au


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