Sale reliance is an issue that has been impacting the retail space for a long time. However, this issue has appeared to grow exponentially over the last few years following the boom of ecommerce. Shoppers are as price conscious and tech savvy as ever, with a common trend of sales spiking only when prices are lowered.

Throughout this blog, we will explore methods that brands utilise to push full price sales, using best practice examples from the industry and a few of our clients.

Why is discount reliance an issue?

When external factors begin to impact trade, it is very tempting for retailers to run flash sales in order to increase cash flow. However, a discount-focused strategy can often lead to many long term disadvantages. A recent study shows that shoppers whose first purchase is induced by a discount are 50% less likely to make a second purchase.

So why is a reliance on discounting an issue?

• Sale reliance changes consumer mindset - Running consistent discounts encourages shoppers to always be on the lookout for a more competitive price
  Brand loyalty and sales don’t mix well - Lower prices rarely lead to brand loyalty, instead they attract smart shoppers who jump at an opportunity, no matter the brand.
• Any discount is the enemy of a full price strategy - Special offers still have their place in any pricing strategy, but retailers should focus efforts on sales that complement long-term strategies.
• Flat sales should be the last resort to attracting customers - Sales should be rare, exclusive, and short.

The impact of discount reliance on fast fashion

Sales for the fashion giants revenue grew to £104m in the second half of 2021 during the ecommerce boom, with high discount sales being a large part of this.

Fast forward to the same period in 2022, and ASOS has reported a 80% decline in sales, with a -£10m operating loss. This was attributed mainly to customer attitude on pricing, and a reliance on discount.

The new business plan now includes focusing more on ASOS’s key markets, reducing markdowns and promotions. A quote from their strategy team explains “introducing shorter buying cycles as well as more nearshoring so it can react quicker to rapidly changing demand” (Chloe Collins, Head of apparel ASOS).

Even traditional brands running seasonal sales have seen a decline recently over their long term sales. Away from discounted periods, ‘evergreen months’ (months out of seasonal sale periods e.g. Jan-April & Aug-Oct) have also seen a -20% decline year-on-year.

Key methods for pushing full price

Method 1: Collaborations

Brand collaborations are growing in popularity because they’re a royalty-free way for brands to reach new but relevant audiences. The purpose of most brand collaborations is to engage and excite fans.

One of the biggest benefits of pushing collaborations is the free organic growth by user-generated content and articles. From fashion enthusiasts posting content on TikTok to Hypebeast running multiple articles, the reach of free publicity around strong launches is endless.

However, adding value is critical, whether that’s a limited-edition product, something collectible or a unique offer.

Stüssy is the best example of utilising collaborations. Across the year, they focus around highly publicised launches instead of seasonal sale periods.

Stüssy x Nike

Global & commercial launches, but coexisting relationship

Stüssy and Nike have been collaborating for over 20 years, with their first collaboration in 2000. Ever since, these launches have grown in popularity year after year. On average, Nike x Stüssy collab every one to two years, and demand is always incredibly high on these products. Users are also highly motivated to purchase quickly on launch days as resale value can reach up to 3x.

Stüssy x Martine Rose

Niche  and anti-commercial

Collaborations focused on maintaining brand integrity, whilst producing unique and collectable products are key. Aside from the huge commercial success of their bigger collaborators (including Nike, Converse, and Timberland), Stüssy maintains exclusivity with their launches. The recent collaboration with Martine Rose was praised by the fashion community for small collections focused on design and art, not commercial success. As GQ’s Fashion Critic, Rachel Tashjian, noted in 2021, Stüssy’s strategy around launches is to “think smaller, be more niche, and respect its heritage without wringing it dry.”

Method 2: Pushing exclusively

Where you sell is as important as how you sell. Keeping supply lines limited is important to retaining full price customers. Being a DTC site with specific access to products encourages a unique purchase drive for users (even if it's for a short period of time).

Users with existing accounts on multi-retailer sites are more likely to purchase there instead of the original DTC site - especially if distribution factors are better elsewhere (for example, the delivery through Amazon Prime or ASOS next day delivery for members).

Rolex

One place to buy a new Rolex

Rolex have been historically picky on where their products are sold. This enhances exclusivity across their brand as their products are not accessible to everyone.

Rolex has a monopoly on all products they release, but all products distributed to dealers are fully checked. Any Rolex Authorised Dealer (in person or online) needs to wrap up a contract with Rolex and also signs a Rolex Distribution Agreement that stipulates what a dealer can do.

In terms of new product releases, they ensure a 5 year international guarantee. The guarantee issued by Rolex itself, will be completed and dated by the Official Rolex Retailer at the time of purchase and registered with Rolex. This ensures that the watch has been sold by an official retailer. In other words, only a select few retailers are able to sell new Rolex products.

Method 3: Referral programmes

Despite offering a form of discount, referral programmes definitely benefit brands long term.

The most popular type of referral is incentives. With this model, a person has a reason to refer your products to their network - be it to receive a discount on their next purchase, or a cash kickback.

A solid understanding of your customer lifetime value (CLV) is key. You want the cost of acquiring them (i.e., their reward) to be lower than the total revenue they’ll make.

Tesla

Introducing discounts whilst maintaining premium brand image

Tesla has its own multi-tiered referral program (Loot box). Both new and existing customers get 1,500 kilometres of free charging when they buy a car through a recommendation.

People who’ve made a successful referral are also entered into a quarterly giveaway. One referral equals one entry, with the prize being a brand new Tesla car.

Previous rewards were a brand new Tesla car, a home charger, and a ticket to visit its new factory. The eventual winner referred 188 new customers, generating $18m in sales!

Method 4: Transparent pricing

Many brands like Everlane even market their price point as the cheapest fair pricing on the market. Everlane goes so far as to give shoppers a breakdown of all costs related to an item, such as how much it pays its factory workers, how much it pays in shipping, etc.

Fast-fashion brands have definitely come under stipulation regarding the operation costs and sustainability of their business (SHEIN and BooHoo are notable examples here). The result of this approach is that brands can create more loyal customers who feel like they’re buying a well-made item at a fair and ethical price.

Perhaps more importantly, customers pay full price because an item costs what it costs, and they trust the brand to set a reasonable price point from the start.

Method 5: Buy now, pay later

Price is one of the most common sticking points for customers (especially when everything else is considered). It’s also where Buy Now, Pay Later (BNPL) methods can be incorporated to aid consumer confidence on full price orders.

Most large purchases people make are transactions paid off for a set period of time post acquisition (such as mortgages). Buy Now, Pay Later methods have become an important part of commerce to help people make purchases they might not otherwise be able to.

Guidance shares that BNPL have the following benefits to your brand:

• An uptick in average order value (AOV) by as much as 45% because the payment flexibility encourages customers to spend more.
• A 35% increase in checkout conversions (and with cart abandonment rates near 70%, this is significant).
• A significantly reduced average return rate of 5.4% (the industry average is 20%).

Final thoughts

Adopting some of these methods into your branding or digital strategy will help propel full price sales for your business. We all know running seasonal sales are lucrative and it can be tempting, however, the long term implications of brand integrity and consumer conditioning must be taken into account.