Fashion discounting can pay off post-pandemic - report

By

Sandra Halliday

Published
Nov 15, 2021

Discounting may be the thing that most fashion retailers try desperately to move away from, however as a strategy, it can pay off, a new report said on Monday.

While discounting strategies are often blamed for depleting fashion retailers’ slim margins, “markdowns can drive brand discovery among shoppers, grow ambient sales and increase long-term loyalty”, the latest research from artificial intelligence (AI) software specialist antuit.ai claims.

The research comes against a backdrop of fashion sales online being expected to overtake physical revenues for the first time this year, which is three years ahead of what had been expected pre-pandemic, according to the latest assessment from Retail Economics. It means fashion retail has been changed forever in just a few short years.

And antuit.ai said that its original research among 2,000+ UK shoppers has shown over half (54%) of them have become more price sensitive when it comes to fashion purchases since the start of the Covid crisis.

The pandemic prompted a sustained acceleration to online fashion, with digital sales rising 19% to £2.7 billion last year, but with total clothing sales still down compared 2019 at £9.6 billion. This prompted many apparel retailers to turn to discounting strategies to stimulate demand, as  fashion shopper price sensitivity intensified.

Now, the study says that "as new cohorts of shoppers migrate online and discover new brands for the first time, discounting plays an increasingly important role in consumers’ discovery and can be a gateway to trying new brands”.

Some 60% of those surveyed said they would be more likely to try clothing ranges from new retailers when they’re marked down, allowing them to try out new brands and styles, while 79% of shoppers who tried new fashion brands during the pandemic said they would remain loyal to these retailers post-pandemic.

The firm’s data also showed that discounting “can grow longer-term revenue opportunities and customer lifetime value (CLV), creating a halo-effect from the original discount”.

As many as 54% of shoppers it polled who’d bought a garment when it was discounted went on to buy additional items at full price.  And 46% of UK shoppers saying they bought a discounted item of clothing were also “more likely to add other full-priced garments into their shopping cart”.

Not that discounting appeals to everyone. The study also found 23% of respondents being “more likely to be put off buying clothing when it was marked down”. And discounting needs to be used carefully because half said that if they were already loyal to a brand, being given a discount wouldn’t sway their decision. They’d buy from a brand they loved, regardless of whether or not a discount was being offered, suggesting that in these cases, discounts would be counter-productive.

Yogesh, Kulkarni, co-CEO at antuit.ai, said: “While some discounting can drive add-on sales opportunities, acting as a gateway for consumer to try out – and come back to – new brands, retailers need to strategically assess when – and, indeed, if – a discount is needed to drive a conversion.”