Vend: discounting grew 10% in the past year, as independent retailers feel the ‘always-on’ pressure

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Data released today by leading retail software provider Vend, shows that independent retail discounting levels have increased by 6% over the past two years, as market pressures continue to drive product markdowns.

And, in just the past year, discounting levels have grown by 10%. However, the percentage off that retailers are applying to their products has not increased. And encouragingly throughout this time sales volumes and spending have also seen a boost, with sales volumes up 5% year-on-year, and spending up 9%.

“The growing demand for discounting has really been impacting big-box retailers like John Lewis over the past year, so it’s not surprising that independent retailers are also feeling that same pressure,” says Higor Torchia, EMEA country manager for Vend. “But it was clear in our data that discounting is changing. From 2016 to 2017 retailers were discounting very frequently, and prices were fluctuating up and down a lot. Whereas in 2018 discounting levels have generally remained steady, with much bigger spikes happening every now and then. As we know, frequent discounting can be hugely detrimental to retailers, especially indies who often have small margins. It’s likely these retailers are trying to fight back against ‘always-on’ discounting, and instead create more strategic sales campaigns at key times.”

December continues to be the biggest discounting month each year as well as the biggest sales month. However outside of this time there was a positive correlation between discounting and consumer spending.

“When we looked at the data outside of December, which is always going to see big numbers, there were quite a few instances where peak spending days followed along very closely with peak discounting days – though not always,” says Higor. “This is probably due to discounts often working well as a marketing tool, where retailers promote an upcoming sale to their customer base which drives those customers in-store to spend more than they usually would.”

2018 peak discounting days (by % off):

  • 12th March
  • 30th April
  • 15th May
  • 29th June
2018 peak retail spending days:

  • 10th March
  • 28th April
  • 12th May
  • 30th June

Fashion and apparel stores are those that discount the most, showing the biggest spikes in discounting levels across the year, while most other retail types remain steady. Fashion and apparel retailers also seem to apply the biggest discounts to products when they do have a sale – 18% on average. This is followed by sports and outdoor stores with a 12% discount, speciality food and drink (8%), home, lifestyle and gifts (8%) and health and beauty (5%).