Discounting for silly season
Talk has always been cheap but never so widely available at such threadbare prices. Black Friday kicks off the silly season of meaningless reports about how successful it has been, desperately trying to divert attention from what is by definition, an act of industry-wide self-harm.
Clearly, consumers only have a certain amount of money and that spend forward several weeks at a discount remains destructive. What to sell remains an issue. Either you clear mainstream stock or you buy specially – either way you will both dilute your margins and your brand equity. Whatever the claims, special buys are of inferior quality.
Then there are returns. Everyone quoting this year’s sales hike will quote gross ie before returns because they will not yet know. And when they quote year-on-year figures, are last year’s figures gross or net? And have they forecast this year’s returns, and if so on what basis?
The potential damage of Black Friday is being mitigated to a degree by a) extending the period and b) managing down more tightly the volume of offer discounted. But both are sticking plasters that provide limited protection. Once Black Friday ends it will merely be swapped for the next promo as we run into Christmas, discounting all the way, followed by the Christmas Trading Statement season.
Again, we will hear of sales records broken and best evers, press releases featuring sales of (insert product of choice) spanning the earth three times and with a few very notable exceptions, will actually tell us little. These Statements have always been open to abuse but today, with online so significant, they are deeply misleading. They never ever include returns. Retailers with significant, and growing, online sales will necessarily be reporting inflated numbers. And naturally, the topic of margins will not feature at all.
Talk is getting increasingly cheap. My advice is, don’t buy it.