Never ending Sales and the effect on fashion brands
Alexis Caught, Insight Manager at our office in Amsterdam was asked to write a trend piece about fashion branding for Dutch magazine Fonk. Here’s the full article:
Since the global financial crisis first hit, consumers have been turning away from the middle market, that’s not a growing trend, it’s happening. Across all sectors we’re seeing polarised shoppers economising on many products, while trading up on others for an ‘affordable piece of luxury’ – treating themselves in these woeful times. But how has that left the world of fashion?
As their core consumers seek to economise, and question spending X amount on a top, when they can get something similar elsewhere at a fraction of the cost, panicked shops respond by offering discounts. Welcome, to the world of eternal sales.
It used to be that sales happened twice a year, January, the often eagerly anticipated “Christmas Sales”. Second, the “Summer Sales” as summer stock was cleared for more weather appropriate coats and jumpers. But walk down any shopping high street now, and you will find a mass of discounts being eternally offered, desperate to tempt shoppers in.
Not all shops though, just the middle market. Budget ‘fast fashion’ retailer Primark, who rose to prominence after it ‘democratised fashion’ and brought incredibly cheap clothes to the masses, isn’t suffering from sales fever. An already cheap retailer, it doesn’t need to, when consumers shop there, they know that they are making a price/value judgement. The emotion that Primark brings to its clothes, is the fevered, and excited consumer feeling of “I got a bargain” combined with allowing consumers to cheaply refresh their wardrobes.
Somewhat ironically, just as the cheap, low-end of the fashion market is booming, high-end and designer labels are reporting healthy sales. Just as consumers trade down, they also trade up, treating themselves on a ‘big purchase’ or a more everyday ‘affordable luxury’. In the grand scheme of things €21 isn’t a large amount of money, so consumers will treat themselves to an ‘expensive’ designer lipstick, and all the emotional rewards they get from the associations of its premium status. Every time they use it, their lips are painted in glamour – a nice feeling when you’re facing an unsettling economic climate. Similarly, those who once frequented the middle market shops, are now saving their purchases, forgoing their habitual mini-splurges in mid-market retailers, instead saving that money for one ‘big purchase’…accounting for the take off in luxury hand bags.
Consumers have adopted a very rational approach to shopping, one that used to be driven almost entirely by emotion. That handbag, while on the face of it expensive, now represents a perceived “good value” as consumers adopt a “cost per wear” attitude – evidenced by my flatmate’s insistence that her new designer handbag “worked out really cheaply really, I’ll use it every day and you know it’ll last forever”. This same mentality is evident with Primark shoppers who resign themselves to the fact that yes, if it costs a fiver, it’ll likely fall apart after a few washes – but they’ve made that cost/value trade off. Cheap retailers don’t sell themselves as “investment pieces” (the phrase used by the fashion industry to justify expensive items) they sell themselves honestly, cheap but exciting.
Faced with competitors on either side, one lower priced than they’ll ever be (even with sales) and the other of high quality and social cache, the middle market has lost its way.
Trapped in a downward spiral, the high-street fashion industry have begun to induct some worrying consumer habits that stand to cause long term damage not just to their brands, but to their industry. This constant state of sales I mentioned, is short-termism, pure and simple. They are focusing on short-term sales returns, over the long-term health of their brand and business.
Sales, to the consumer, are like a drug, each sale produces diminishing returns, causing the retailer to slash prices deeper, more often. The simple consumer psychology of sales works in two ways;
1) “Bargain! Look how much I am saving!”
2) “I have to get it now or it’ll be gone tomorrow!”
The two work in tandem, the first, gives the consumer permission to buy, greatly changing their value perception of the product, the second, provides an immediacy that forces the transaction. Trouble is, when consumers know something is likely to be on sale in the near future, it takes away any impetus to purchase and is replaced with “I’m not buying it full price” …greatly damaging the value perception of your brand.
And so, by consistently offering sales throughout the year, at alarming discount rates, brands are undermining their own brands worth, taking away the value. If the retailer doesn’t appreciate their stock and believe they are worth their marked price…why should the consumer?
Three mid-market brands bucking this trend, Topshop, H&M and Uniqlo have all had the courage and vision to be brand lead. Keeping discounting sales to a minimum, they focus on improving the credentials of their brand, which like sales, greatly improves consumers value perception…making their clothes a bargain, even at the RRP.
By putting fashion first they have each been able to capitalise by developing new cache for their brand. Each retailer has worked on a series of collaborations, either with a famous fashion icon (Topshop and Kate Moss), produced a range with a famous fashion house (H&M and Lanvin) or even worked with pop-culture giants (Uniqlo and Marvel). By doing this, they have been able to instill their middle-range clothes, with high-end credentials and the valuable ‘cool points’ that come with it. By Donatella Versace doing a range for H&M, she is endorsing the brand, and all those that wear it. Suddenly, the consumer now has the opportunity to buy an item designed by Karl Largerfeld but with an H&M price tag.
I’m not saying all fashion brands need to rush out and begin on high-end collaborations, instead, they need to be brave, have vision, and above all, believe in their brand. Value your brand, and your brand will hold its value.
In: Advertising, Brand communications, Brand Experience, Brand Strategy, Fashion, Luxury, News, Ooh that's nice, Retail · Tags: Branding, Fashion, H&M, Primark, Topshop