Occasional sales used to be healthy for businesses as they shifted old stock, generated cash flow, freed up storage space and attracted new, profitable customers.
But Black Friday, Cyber Monday, January sales and the like have merged into never-ending sales putting constant pressure on retail margins. This means suppliers need to cut costs and even jobs to meet the retailers’ demands. Not exactly great news for UK PLC.
The problem is that we’ve educated a generation of consumers to just expect discounts - and then armed them with price comparison apps. What sane retailer slashes prices by 70% and burns through its marketing budget, only to attract bargain hunters who surgically strip out the deep discounted loss leaders and then disappear without even buying a Mars bar at the check-out?
With Black Friday now generating £810m in online business each year, it’s hard to stand aside and watch competitors throw the kitchen sink at discounts with aggressive marketing campaigns.
But sales don’t need to be bad for business if retailers are smart and get their bargain hunters to bring them something in return, by asking them to refer friends as a condition of claiming their amazing bargains, for example. There are various ways of doing this, like gamifying the process by introducing a referral leader board or adding exclusive rewards into the mix.
By Gideon Lask, CEO of Buyapowa.
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