Myth: EOSS acts as a magnet for the stores to attract more customers but eventually the major chunk of customers erode the margin and end up purchasing discounted products.
Reality: Retailers typically offer 30 percent to 60 percent discount during EOSS, however our study shows the buyers obtain only 5% to 15% discounts on average. While this positively affects retailer’s revenues, it implies that sale stock will take more effort to move at desired rates.
Two key challenges remain for even top performing EOSS
Using targeted marketing to map the right promotional schemes to the correct customer segments
Ensuring that buyers attracted by discounts, purchase non-discounted or premium product categories and that one-time customers make repeat visits to lower costs of customer acquisition via EOSS The solutions to these challenges are hidden in the customer data that retailers typically capture and other hints that customers leave along their journeys across different retail channels.
Myths: Customer footfall and revenue during EOSS contribute a higher percentage to your overall revenue.
Reality: While EOSS-related revenue has been increasing, contributions from this seasonal sale to overall revenues has been dropping consistently, while average levels of discounting have grown substantially. The graphic below depicts the trend for some of the major apparel brands with over 100 stores in India.
Myth : To make customers spend more, offer higher discounts.
Reality: Retail sales in the western world currently approach 31-33% markdowns overall. In India, markdown rates are much lower at 14-20%. To increase discounting, retailers must also increase base (non-discounted) pricing, which can make products unaffordable, driving more customers to the habit of seeking discounts. This poses a key concern for retailers as offering higher discounts does not seem to be the right path. Trying different and unique concepts becomes the need of the hour.
Myth: Big seasonal sales compensate for the declines in sales and customer volumes that typically precede EOSS.
Reality: The months leading up to the July on-sale period are the most dreaded in the retail business. Revenue numbers plunge by double-digit rates as customers wait for discounts. The reality is that retailers should work more aggressively to mitigate pre- and post-EOSS sales declines. ‘Mitigating pre- and post-EOSS dip does not compromise EOSS footfall. Customers have higher tendencies to comeback within 30 days of purchase, hence the probability of EOSS visits increases for customers who are also encouraged to shop in the pre-EOSS season.
Myth: Customer volume creates EOSS success.
Reality: We conducted a survey to find out why customers appear to be buying less during EOSS. The results reveal issues on which marketers tend to focus less. For example, customers are discouraged by long queues and feeble customer experience during huge sales. Most high-spending customers feel that EOSS offer deep discounts on mostly outdated stock and that store staff is not focused on their needs and choices.
Well, now the question arises what retailers should do so they can generate maximum revenue from this season. Following mentioned are few best practices to get maximum benefit from this discount season for retailers: