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Industry expert: How to ditch discounting and drive sales

Luke Griffiths
04 March 2019

Gone are the days when discounting was confined to the traditional twice-annual seasonal sales. Today, it’s a much more unpredictable retail occurrence.

There are many reasons retailers get drawn into the discounting culture; to drive short-term sales, because the competition is doing it, or, it’s holiday season. And while discounting does have its perks — with the most recent BRC-KPMG Retail Sales Monitor revealing sales rose in January thanks to a boost from discounting — short-term sales peaks are leading retailers to overlook the problems of long-term discounting.

Klarna’s own retailer research highlights the darker side of discounting, revealing that 53% of retailers find that the always-on nature of sales is having a negative impact on their bottom line; a pinch that’s felt by merchants of all sizes. And 56% of retailers say that the majority of discounted transactions come from online trade.

So, with January sales out of the way, what benefits can retailers reap from a discounting detox, and what other areas can they focus on instead?

It’s all about customer experience

Customer experience is a hot topic right now, but so few retailers are really delivering. Traditional loyalty is on the wane with the amount of competitive choice available now. This means that shoppers will simply go elsewhere if a retailer’s shopping experience fails to measure up. As such, every stage of the shopping journey needs to be built with the customer in mind.

In addition to retailers, we also surveyed 1,000 UK consumers to better understand their attitudes towards discounting. Interestingly, findings revealed that constant sales can damage brand value and perception, with a quarter of consumers saying they are less likely to shop regularly with a retailer who always has a sale on. A further 38% said that constant sales make a brand look cheap and unfashionable. It’s clear that merchants and consumers are increasingly disillusioned with discounting. Instead of constantly promoting sales, merchants should look to surprise and delight shoppers throughout the everyday customer journey. From including a chat pop-up to help them find that perfect dress, to emailing customers with latest available trends they will love — the possibilities are endless.

In the dizzying world of big discounts, loud adverts and demanding shoppers, offering consumers a smooth, efficient and hassle-free service from start to finish should be the number one priority for any brand.

Make things personal

Today, customers want the level of service they receive offline to be reflected — or exceeded — in their digital experience. Our research highlights a clear opportunity for retailers to escape the sales cycle and boost revenue by paying more attention to personalisation, with 45% of consumers saying they would be more likely to shop with a retailer if they were sent a personalised offer. Focussing on personalisation instead of discounting has a range of benefits, with our research showing that 65% of retailers who trialled personalised messaging found it appealed to customers. A further 34% said they offer personalisation because it means that they can do targeted discounting to reward shoppers, without having to align to the calendar (such as the January or summer sales).

Offer flexible and hassle-free payments

All retailers will agree that piquing customer interest is important, but closing a sale is crucial. One of the biggest inhibitors for customers is the potential inconvenience of making a purchase. Whether that’s having to get your wallet while you’re browsing on the sofa or needing to complete multiple steps at checkout, such frustrations result in an unsatisfactory shopping experience. And if they find the purchase experience slow or clunky, they will simply abandon their basket or turn to a competitor. Customers now want the same level of convenience across the board; they can pay with one click and without having to enter lots of details when ordering a pizza, so they expect the same simplicity when buying a pair of jeans.

Retailers offering a range of convenient payment solutions are the ones who will stand out from the crowd and encourage customer loyalty. Options which allow shoppers to pay in installments will enable them to buy the new coat or pair of shoes at any time of the year — rather than having to wait until the sales when the goods could be sold out. “Try before you buy” payment methods like Klarna’s, are another must-have option for retailers. By letting shoppers try items on at home — turning their sitting room into a fitting room — retailers afford them the flexibility of making sure they are 100% happy before they part with any money.

At a time when consumers are saturated with choice, getting the basics right remains the most effective method of boosting sales. With an increasingly complex customer journey and consumer expectations higher than ever, adding a personal touch and optimising the customer journey from start to finish is the trick to breaking out of the sales spiral and building a viable strategy for success.

Change isn’t always easy, but with 41% of retailers saying they would stop discounting today if they could, there’s no better time to bring in a new era for retail.

Luke Griffiths is general manager at Klarna UK.


Luke Griffiths

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