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Discounting started long before Black Friday as online and mobile … – InternetRetailing.net

Discounting started long before Black Friday as online and mobile … – InternetRetailing.net

Commerce comedown: slow sales in September and October sees retailers discounting furiously

Online and mobile retail sales were down “significantly” in October, with many retailers “trapped in a discount cycle” long before Black Friday kicked off, warns IMRG in its latest figures.

UK online retail sales growth hit the second lowest level (+8.5% YoY) ever recorded for October last month, while sales from mobile devices was also down markedly in the same period, increasing by +17.2% YoY compared to +53% last year, says the latest Capgemini IMRG e-Retail Sales Index.

Evidence for the tough period retail has been experiencing can be seen in the level of discounting on retail websites. In Q3 (Jul-Sep), 23% of overall sales revenue came from products that were in sale; this was up almost a third on the same period last year (17.8%) and was also a sharp increase on Q2 (Apr-Jun) when it was 15%. This is significant entering the Black Friday period, where retailers are reliant on discounting to capture shopper attention.

Despite this, it was a positive month for the clothing sector on the back of its low performance in September (when growth was just +2.2%. The index increased +10.1% (YoY), with the strongest performance in Menswear at +49.6%.

Andy Mulcahy, strategy and insight director, IMRG: “The latest figures corroborate a trend that has become increasingly evident over the past few months – that, even months before Black Friday, a lot of retailers found themselves stuck in discounting cycles. In the third-quarter, the percentage of revenue from items sold at a discounted rate was up by almost a third compared to the same period in 2017.”

Mulcahy adds: “The ability to run a flash sale or discounting campaign can be an important tool for stimulating sales activity, if order volumes are running below forecast. Now, halfway through Black Friday week, this poses an interesting question: will the launch of Black Friday campaigns struggle to capture shopper attention, as they are used to seeing discount promotions from those retailers, or will shoppers still see this period as the key time to get most value for their under-pressure finances?”

Bhavesh Unadkat, principal consultant in retail customer engagement, Capgemini: “The October sales increase represented a modest start to the final quarter, and it is clear that consumer confidence is low at present. The GFK total consumer confidence dropped by one point and Major Purchase Index decreased by two points in October – we believe that the anticipation of Black Friday and the political and economic uncertainties around Brexit discussions are factors contributing to this.”

Unadkat continues:“The confidence of online retailers is also challenged as they are caught up in cat and mouse play around discounting strategies. Do they protect margins by continuing to discount or do they pursue share of wallet as costs increase? Black Friday is now an established part of the cycle, meaning there are more data points for retailers to plan informed offers – it will be interesting to see whether they stick or twist on their strategies from last year.”

Image: Fotolia

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