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January 10, 2017

Article Written By Diana Springer, Partner: Head Of Strategy (Gauteng) for Business Day (Late Final) – 12 December 2016

As SA catches up with the promotions trend, retailers may be setting a dangerous precedent because of retail promotions an area in which SA is catching up to the US and Europe there’s a growing sentiment among value conscious consumers that there is no need to buy full price merchandise because it will be on sale next week.


Retailers are “training” shoppers, creating an apparent consumer monster. But is there a happy middle ground?

Recession or no recession, South African consumers love to shop. SA has the sixth highest number of malls in the world. And one in three South Africans 11.5million in total agrees with the statement, “shopping makes me feel that my life is worthwhile” (AMPS, 2014).

Granted, bigticket items such as homes, cars and furniture aren’t selling as quickly or as much as they once were, but many retailers are still performing well.

“Clicks’ results are excellent: says Mike Schtissler of “Cosmetics are going through the roof.”

Woolworths’s clothing and general merchandise sales increased 8.2% over the 52 weeks ending June 2016.

The Massachusetts Institute of Technology has proved that the brain experiences pleasure in pursuit of a bargain, and this “deal addiction” could be part of the reason for increased promotional pressure in SA over the past three years.

This comes at a time when consumers are feeling the financial pinch, so there is huge.competition for share of wallet, and “fast fashion” and online retailers are cashing in. As a result, shoppers who are value conscious anyway have learnt to recognise a good deal when they see one and to look for one when they don’t.

In addition to the emergence of fast fashion retailers with strong value propositions, and the rise in online retail and its “alwayson” promotions, the quest for a good deal can also be attributed to exposure to highly promotional global brands such as Amazon.

Going so far as to adopt Black Friday and Cyber Monday sales, South African retailers have begun to test a range of different promotional techniques, many of which also appear as “alwayson” or nonseasonal.

Makro, Clicks and Woolworths, for instance, have run successful “two for three” promotions on key items, as well as promotional pricing programmes in which cardholders qualify for discounts on bulk or multi buys.

What’s worrying is the growing sentiment among shoppers, regardless of their disposable income, that there is no need to buy fullprice fashion merchandise because it’s likely to go on sale soon. Consumers are waiting for promotions.

This could turn out to be dangerous for the market.

Why? Because if retailers rely on sales to drive traffic and increase spend at a time when retail sales are under pressure, there is a growing sentiment among shoppers that there’s no need to buy fullprice merchandise because it will be on sale next week there might be a dangerous race to the bottom. It is even more worrying when promotions fail to attract new shoppers or to motivate an additional, or bigger, shop from existing shoppers.

In these cases, all retailers have achieved with the sale or promotion is the discounting of existing behaviour.

So how can retailers get consumers to pay full price for merchandise, or even fork out a premium for exclusive and upmarket goods?

First, offer something new. SA’s market is hungry for fun, fresh experiences.

There may be something to learn from US chain TJMaxx, whose success has been partly attributed to selling “new, not sale” items.

Consumers have a chronic fear of missing out and love new stuff even more than last month’s stuff discounted.

Retailers should have clarity of purpose.

As McKinsey & Company highlighted in a July report on South African consumers, retailers must give them.compelling reasons to shop, but they shouldn’t “… try to differentiate themselves in every possible dimension … rather only one or two.” H&M, for instance, offers the latest fashion at.competitive prices a – winning formula.

Shopping is an emotional experience, often dominated by emotional choices and behaviour. Lots of conversation takes place before, during and after a purchase with.compliments shared, tips given and moments created that shoppers will forever associate with their favourite items and brands.

Retailers that offer a sense of social currency stand out the success of John Lewis’s penguin Monty, an advertising campaign for Christmas 2014, is well documented.

Design credentials and collaborations also enjoy success, earning brands the right to demand a premium due to implied value.

This also applies to exclusives consider Nike’s limited edition Quick Strike ranges, which sell out in days.

South Africans 32% of whom shop for pleasure at least once a month, says the 2014 AMPS survey appreciate great shopping experiences that are not only easy but also enriching and exciting. It is great to see the reintroduction of coffee and cafes into department stores, once again making them a destination shop.

To convince indebted shoppers to pay full price for products, retailers should keep the newness.coming, present very clear value, offer social currency to build an emotional connection, and ensure the shopping experience is uplifting.

After all, the search for the deal isn’t going anywhere.

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