What’s The Strategy For Small-Brand Discounting?
5 June 2020
Author: Jasmine Waters
One of the issues small and independent brands have faced in pre-lockdown society – but have been greatly emphasised by the current climate – is the question of discounting. In an environment where nobody really knows what to do for the best, many have looked to desperately discount existing stock in order to maintain some kind of customer relations. But where does the real strategy lie, and how can small brands utilise it – or not – for the best?
Why should discounting be considered?
Particularly after the 2008 financial crisis, brands faced a heightened risk based on how they handled clearing their inventory. Immediately switching to steep discounts doesn’t inspire customer loyalty on a long-term basis, especially to buy at full price when the time is right. Not exploiting the situation still must remain a high priority, but according to marketingweek.com, only 8% of consumers think brands should completely halt their regular selling strategy. As we become more desperate to return to ‘normal’ – whatever form that now may take – consumers will look to more ‘non-essential’ items, even if it does mean they are more cost conscious. To establish how best small and independent brands could incorporate discounting into COVID survival, we must first clarify exactly what types are available to use.
How can I best utilise discounts for my brand?
From research conducted by IMRG, there are currently four types of discounting predominantly being used since the start of store closures – either having a fixed percentage off or an ‘up to…’ percentage off selected items, and a similar strategy for all products. As of the end of May, there was still almost a 50% figure of consumers feeling they would need at least a 30% discount to be lured back into fully spending non-essentially. Regardless of brand size and type, there is still a very fine line to tread between discounting and making sure a product is being sold at the right (full) price at the right time.
The conclusion to IMRG’s monitoring of current discounting trends showed there to be hardly any difference results-wise as to which type of discounting was used – if any. For smaller brands, it is currently advised to offer a discount to selected ranges only, at a 30-50% rate (provided there are enough products discounted at the advertised rate). Within this, clothing brands seem to have a greater success rate with ‘up to’ percentages, while lifestyle brands thrived with fixed. There then comes the question of whether you want your brand to be known for discounts at all. If the answer is no, the use of checkout codes as opposed to website promoted ‘slashing’ could create a best-of-both-worlds situation. The act of discounting itself is still something that should be considered in moderation and as a short-term strategy for small and independent brands. The sooner you can get back to selling product as full price, the better.