Discount sales


 

 

Is it really a sale ?

Last year the ACCC successfully sued a large Australian online retailer (in this case Kogan) for misleading consumers in their "Tax Time" sales promotion during June 2018.

It seems the advertising offer the opportunity for savings of 10% at the checkout when the company had deliberately increased the pricing of up to 600+ products just prior to launching the promotion, in some cases by greater than 10%. These were in some cases expensive electronic items such as computers, etc.

We are not targeting or judging the company for their conduct in this article, but it serves to illustrate what is often a deeply concerning culture in Australian retail, if not also across the global retail sector – that nothing sells unless it's on "sale" or discounted.

In some industries the standard or recommended selling price has become a joke with goods perpetually on sale and nobody pays full price, unless they are clueless which can often lead to a trap.

It's been a long time since I walked through a shopping centre but my memories of every retail outlet having large, permanent red "Sale" signs out the front did not go unnoticed, with barely a handful of brands exempt from this practice - namely Apple, Dyson, etc.

A recent investigation by Choice tracked the price of 4 espresso machines across 13 retailers over a 6 month period to find out when the products were being offered at the cheapest price.

Choice discovered that although the prices fluctuated during a COVID period, the Black Friday sales discounts were not the cheapest overall and that Black Friday did not offer the best deals on these monitored products. Gee, what a surprise !

Black Friday and Cyber Monday has recently emerged as a highly popular choice for consumers and is now apparently ranked higher in value (goods sold) than the traditional Boxing Day and End of Year sales events that have declined over the last decade.

Maybe it has more to do with the BFCM dates falling in the ideal period a month before Xmas when everyone is thinking about buying gifts.

Many retailers rely upon big sales events to shift stock and in the case of some products being prone to rapid obsolescence when newer models are frequently released by manufacturers, the BFCM events are a convenient channel to dispose of excess or distressed inventory.

Nowhere else is this more evident than in white goods and electronics but given supply chain shortages and rising sea freight costs there may be fewer retailers willing to sacrifice inventory at lower margins during promotional sales events.

Perhaps the key driver for many of the retailers participating in BFCM discounting is more about simple FOMO - desperately afraid of losing out on many levels, customers, revenue, marketing, etc.

This year is has also been bizarre to see service industries also jumping on the Black Friday bandwagon – yes, I did see an accounting firm and a garden maintenance company offering a discount if you booked in their Black Friday campaign.

Turning our attention back to coffee, with all the disruption and pain from rising raw coffee prices during 2021, it was always going to be a curious perve to see how many coffee companies would succumb to the crisis of confidence or self-induced peer-pressure to participate in the Black Friday sales events. Look at who's indeed suffering from FOMO.

Sure enough, some gave it a crack, although I didn't go searching wide enough to compile any useful stats it was mostly the noisy and somewhat annoying social media advertising used to promote their BFCM offers.

As we noted in our article about rising raw coffee prices, it's hard to imagine how coffee companies could contemplate discounts at this time if they were indeed offering their products at competitive prices in the market place. The shock of an almost doubling of raw coffee has still not completely sunk in.

But then again many brands see the online segment as a license to empty your wallet or bragging rights on who thinks they are the best by charging the highest prices whilst at the same time offering competitive pricing on the same products to their beloved wholesale clients. A 2 speed rate card it seems.

There were plenty of examples with generous lashing of "mayonnaise" used in the discount claims, retail prices of up to $75 for a kilo coffee was a serious stretch even to our vivid imagination.

Thinking beyond the sale event moment when it comes time for the customer to re-purchase after enjoying the apparently generous BFCM discount, what happens when the price is back at the lofty RRP levels ?, or maybe nobody has fully thought about how that part actually works yet.

Coffee is not like an appliance that is purchased every 5 years and to build trust and loyalty the performance has to be super-competitive every day, not just once a year.

In any case, good luck to them if they make to the other side in 8 months time as the rest of us batten down the hatches for the biggest storm the coffee industry has experienced in a generation.