Mallzee Retail Discounting Update November


Mallzee Retail Discounting Update November

No-one would debate that 2017 has been an annus horribilis for the retail industry - with tough trading conditions forcing many household retailers and brands out of business. Undoubtedly rising trading costs (people, product and premises) coupled with Brexit, political and economic uncertainty driving lower consumer confidence and thus spending there has been a huge strain on retailers cash flow. Leading retail analytics business, Mallzee Insights have analysed fashion retailers pricing response over the first three quarters of the year highlighting a dramatic shift in discounting focus across the entire industry.

The average volume of products that have been discounted and offered at a reduced price, to date in 2017, is a whopping 56% compared to only 35% for the same period in 2016. Although the average level of discount has dropped slightly going from 42% in 2016 to 40% in 2017.


But could the discounting spiral be coming to an end - looking at the graphs below, which plot discounting trends right up to today’s date we can see that for the first time in 2017 the volume of products currently discounted is less than the figure on the same date last year dropping from 51% in 2016 to only 37% in 2017.


Discounting as a means of increasing product sales has been becoming more common in recent years with reports in 2016 suggesting there was an estimated 40% growth in the level of discounted fashion and footwear. Discounting as a longer term strategy can devalue products and brands with consumers being conditioned to only pay reduced prices for certain brands.

Taking a deeper dive into these discounting figures highlights that not all retailers have been adopting the aggressive discounting approach - some are actually offering less discounts and are looking instead to maintain cash flow equilibrium by other means, such as cost cutting or using technology driven solutions to closer deliver on customer wants. For example, Jack Wills reported increased profits having turned around their fortunes by curtailing their reliance on discounting since the end of 2016.

Could it be that retailers are calling time on the discounting spiral? It’s still too early to predict but these figures could indicate that retailers are looking to other cost tightening solutions and aligning their products more closely with what consumers are actually prepared to buy thus maximising full price sell through. Time will tell….watch this space as we will be reporting the figures here quarterly.

Mallzee Insights
Nov 21, 2017

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