It's all about the voucher codes....

Around three years ago I was working for a very large multichannel retailer. They decided to start periodically offering some of their VIP customers an exclusive temporary 'discount code'  they could use when shopping online, as a reward for the customers' continued loyalty and no doubt hefty credit account. The clever marketing department patted themselve son the back for their excellent initiative.

Cue the first Monday trading meeting after the discount code had been launched, and pandemonium breaking out amongst the trading team. It shockingly transpired that our supposed loyal customers had actually been telling friends and family and anybody else who would listen, about their discount code, so that they could all avail themselves of the benefits too. Who would have thought. The take up of the discount code had been 300% higher than expected, and as such had decimated the channel/department's stock and margin for the week. Red faces and burnt fingers all round.

Well as Dinah Washington never sang.. What a different three years makes.

Turns out our marketing department were onto something after all (even if their execution was naive at best) as these days online voucher or discount codes form a key part of a retailer's marketing strategy and as such are made widely available- they are relatively cheap but offer the retailer myriad benefits... and customer don't come off too badly either...

For us: Cheaper goods (hurray!) and potentially discovering (or rediscovering) a site we like that we haven't shopped at before.
 For the retailer: A simply way to reward existing customers thereby building their loyalty further. Ability to clear over or old stocks with targeted voucher code. Ability to attract new or dormant customers to the brand, who may in time also become loyal advocates. And of course ultimately the voucher code drives sales, and (if managed correctly)relatively cheaply too.

Inevitably a number of websites have sprung up to capitalise on retail's new enthusiasm for discount codes (and our eagerness not to miss out on a bargain in straitened times) by advertising all of these, with the ability to browse or search for a particular brand. If you're interested My VoucherCodes is thorough, whilst the Voucher Mum has a good range incorporated into its broader scope of thrift and saving money (and is a charming read).

But I'd warn that retailers should think carefully about their use the voucher code as an easy way to top up flagging sales. There is an increased risk of checkout abandonment and serious hits on profit margins using these codes, as customers on the site who were expecting to purchase at full price, notice the prompt for a discount code at checkout, and abandon their purchase, only to revisit once they've picked themselves up a nifty little discount code- so the code in that instant has not driven an additional sale, simply eroded profit on an existing one. (This can be minimised by more thought on the distribution of the codes, and on how customers are prompted for these at checkout. Some excellent suggestions here how-should-online-retailers-handle-discount-codes.)

Overall though discount codes seem like a pretty fair win win for consumer and retailer. Which of course means that actually the benefit is far greater for the retailer than the shopper- but hey, for 10% off plus free delivery, I can make my peace with that.

Nothing Beats a Good Sale: The Outnet Success Story

One of the most interesting changes that the internet has made to the world of retail has been the relative ease with which new brands and and designers can start trading. Without the overheads associated with running and staffing stores, all one theoretically needs to do business is a decent transactional website, a means to store and deliver stock, and of course a cracking product range won't do any harm....

But of course with every up there up there is a down, so if ecommerce is the relatively cheap means by which you start your retail business- it will be the route for plenty of other competitors also....
This then leaves new businesses with the age old challenge- how to let people know about and the great things you are doing? With a saturated internet retailing market, magazines and supplements are awash with reccomendations for savvy shoppers, so many so that it is difficult for us to remember to have a look when surfing the net after a hard day's work (or maybe during a hard day's work.. heaven forfend). Of course there are additional opprtunities to promote your business through new media, but as everyone else jumps on board, again there are challenges involved in trying to stand out from the crowd....

Which brings me in a very roundabout way, to what I thought was a very smart marketing move indeed- by The Outnet. This website (The Outnet ) is the spin-off outlet site of the rather more well-known luxury fashion website Net-a-Porter, whose owner Natalie Massenet recently made £50m from her 18% stake following the sale of the site to Richemont, the Swiss luxury goods group- which gives you an idea of how successful the site has been.
Outnet is only recently established, and recently celebrated it's 1st birthday, with the Mother Of All Sales. Potential customers were invited to sign up to the website to get an invite to the online sale- designer products in which would all be sold for £1- limited to one per customer. Yes I did say £1.
Needless to say the sale was massively popular, selling out within hours as thousands of customers got a bargain of a lifetime, and thousands more were disappointed as the site continually crashed due to volume of traffic (I missed out on a pair of Philip Lim 3.1 trousers and I'm still sore about it)

Undoubtably the cost of reducing all those goods to sell at £1 would have been a considerably expense, and one that someone in the Finance department was probably having sleepless nights about, but I can't help but think this was a marketing move of sheer brilliance for the fledging site.
The sale generated considerable media exposure- both before and after, which will have increased the awareness of the brand in the market place hugely. (Look- we're talking about it now!) But most importantly- in order to be invited to the sale, those who were already in the know had to register with the website- given those golden details- name and email address, that mean that Outnet have a much larger potential customer base now,  to contact with information, sales and exclusive offers, to build a strong relationship that they hope will encourage us to shop with them when goods aren't £1...

A young retail business will flounder quickly without exposure and a customer base. These things are difficult to come by- yet Outnet has proven that sometimes the best solution is the most obvious- Nothing Beats a Good Sale.

So How Was It For You?: The January Sales

The Jan Sale I mean!

The long held tradition of the 'January Sales', where we would all faithfully drag ourselves around the shops during the long weeks of January- to cheer ourselves up and get the bargains on the products we had been eyeing up before Christmas seems to officially be over....
I certainly remember the days, not so long ago, where the more committed amongst us would be there on the first day, picking up the early unmissable deals, whilst others of us would browse, and ride out the rest of the sale period until the dying days when the final clearance of goods would throw up some more cheap gems...

But there's no time for that now! With alot of the bargains available pre-Xmas as the high street start their sales ever earlier, Retail Week reports one 'fashion-led retailer' as stating that his business would be out of clearance and trading full price again by Thursday!!! And I think this phenomenon is evidenced to a degree on the high street and online. Sure there are still plenty of goods available at reduced prices, but it's only the 6th of January and those goods are moving quickly indeed with the best choices already gone- I tried to order a coat online late last night that was already out of stock by the time I got to payment!

And why? A key reason is that a lot of retailers have been caught out in the past, particularly last year when winter stock had been ordered many months before the full impact of the recession on consumer spending had been known or felt. This left them with a high stock holding of old/discontinued lines- the proverbial albatross around the retailer's neck, tying up cash that should be spent on new stock, and eroding margins as the stock needs to be ever deeply slashed in price to be cleared.
Nobody wants to make that mistake again, so tighter stock management has been required, with stock holding reduced, and stock turn increased, (smarter sourcing helps- reducing lead-times means stock can be bought in smaller, more regular quantities, reducing risk), with early sales and initial competitive price cuts to clear out that residual winter stock quickly and move on....

Finally and most importantly- Is this a good thing for consumers? Well, if you have been savvy and fairly aggressive about your sale shopping then perhaps you have still done well out of this years' sales; but the more laid-back shopper has probably missed out- as they say, You Snooze, You Lose!
It also presents more challenges for retailers as they now have to present us with a new reason to brave the shops at this somewhat grim time of year, and a reason to part with our cash at a time of the year when we were still expecting post-Christmas bargains...  So the new season of products will need to be in stores much earlier, and will need to include real 'Must-Haves' to acheive those objectives.

Lets see how that pans out....