Stop the repetitive sales culture and embrace experience-led shopping

Not too long ago, sales were the sign of changing seasons: a way for retailers to empty the warehouses of items that weren’t suited to the next six months of shopping. As times have changed, we know that sales have become a popular way for retailers to drive customers – either on foot or online – to their stores. But how successful is the ‘sale strategy’, and how profitable is it for retailers, who we know are currently facing a restless retail landscape?

At Klarna, we recently surveyed 500 British retailers to investigate the impact that consistent sales can have on merchant’s profits. Retailers, both big and small, are seeing a detrimental side effect of their discounting efforts. Over half (53%) claimed the “always on” nature of sales has a negative impact on profits.

In addition to this, the eCommerce channel is particularly vulnerable for making a loss through sales, with 56% of retailers claiming the majority of their discounted transactions come from customers shopping online. While it’s no surprise that selling stock for less than the RRP will affect retailers financially, there are a number of other ways to win over customers without sacrificing the bottom line.

The inside scoop from shoppers:
On top of our research into British retailers, we also investigated customer attitudes to shopping, to see if the humble sale rail really is the ‘magic draw’ for consumers that retailers seem to hope it is. Less than a fifth (18%) of respondents say they only shop when there is a sale on – showing that retailers can still expect the majority of consumers to spend, even at full price. This rose slightly to 23% for millennials, but dropped ever so slightly to 22% for Gen Z. When compared to the over 55s, just 11% would wait for sales before hitting the shops.

Why are shoppers snubbing sales in droves? Klarna’s research shows that over a quarter (28%) of shoppers claim sales are too stressful and avoid them altogether. While the ‘stress’ of shopping does tend to apply more accurately to those shopping in store, this feedback demonstrates that sales are not the only answer to retailers’ problems.

To add to this, constant sales can actually diminish the brand’s value in the eyes of the consumer. A quarter of shoppers claimed that they would be reluctant to regularly shop with a retailer who is always offering sales. 38% also said that a constant sale makes a brand look “cheap” and “unfashionable”.

So, if it’s not sales, what DO consumers want?
If sales are losing retailers money, and potentially losing them customers too, it really should be a nudge to ditch discounting. Instead focus on providing an exceptional customer experience. At a time when retailers are facing one of the most challenging decades in history, getting it right is crucial.

Retailers should turn to more shopper-centric initiatives to win custom and loyalty. Our research shows that more thoughtful, personalised sales tactics could be a winner for retailers, with 45% of consumers saying they are more likely to shop with a brand if they are sent a personalised offer. On top of this, a smoother consumer journey and improved payments options are some of the things that are fast becoming the bread and butter of online retail – and these elements are far more important to shoppers than discount.

Evolving the payments process
Klarna has also researched the impact a poor payments process can have when it comes to closing a deal at the point of sale. In our research, over a third of customers surveyed (36%) would be more likely to buy full price items online if they were able to pay later, once they had received the goods and decided what to keep.

Additionally, some 52% of 100 UK retailers questioned for a study from Ovum and Klarna said that friction at the online checkout page is the biggest reason that shoppers abandon baskets online. A further 40% blamed a lack of payment methods and 39% said a lack of lending or credit options stopped consumers completing their payment.

By listening to this consumer feedback, and making real changes to the shopping journey, retailers can not only encourage more brand loyalty, but less ‘apprehension’ at the till, and fewer abandoned baskets. This will lead not only to an increase in revenue and AOV, but a higher number of repeat customers.

Multiple payment options at the point of sale will offer shoppers choice, as well as convenience and financial flexibility. Klarna offers solutions to facilitate all types of transactions – Pay now, Pay later, and Slice it – which allows consumers a multitude of ways to pay for their items, whether that’s immediately, or after their items have arrived.

While seasonal and mid-season sales might have felt like the answer for retailers looking for a quick boost, the current economy is showing that short-term wins aren’t the basis for a long-term successful brand. Looking past the traditional operational models and embracing modern changes which customers want to see when they shop, is the future. A better shopping experience will make it more likely that a customer will become a repeat customer, and all without having to sacrifice a retailer’s bottom line.

Want to find out more? Download the whitepaper here.

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