My daughters and I were getting a head start on back-to-school shopping at the mall recently when one of them brought me a new pair of jeans she wanted. They fit great, and they looked like they might even hold up through an entire school year, but when I looked at the price tag, I felt a little dumb. They were full price.
I looked up and scanned the aisles for sales tags, but I didn’t see any near the jeans. I was a little surprised, but then I realized we’re in between sale seasons. It’s the few-week gap where we don’t have a holiday sale or a back-to-school sale. I checked my phone, and sure enough, they were on sale online.
Ask any national department store retailer and they’ll tell you almost no customer buys full-price clothing, because they know the items will be marked down in a matter of time. A Wall Street Journal article reported the typical markup on fashion items is more than two times the manufacturing cost.
There is so much room within the markup to bring prices down, and retailers do it every day to increase perceived value — but to what extent are they just lowering value?
When is the last time you bought a full-priced sweater or pair of pants at a department store?
A decade ago, markdown sales were the way to go — and they remain relatively popular today — but the vast majority of consumers realize the bulk items we buy every day were never meant to be sold at manufacturer set retail price.
Most of us only know about MSRP because we’ve seen it slashed on so many sales tags.
In the current marketplace, doubling costs and then running 50% sales doesn’t work like it once did. Sure, Black Friday and Labor Day extravaganzas are fun shopping traditions and a good excuse to walk off the extra turkey or beer weight, but would you rather wake up at 5 a.m. to be lied to about product value, or sleep in and get a better deal online the next day?
We’re advertising to fewer idiots.
That’s right — customers are smart. Well, they’re smarter — or better informed.
What’s the difference? Even if consumers are idiots, an idiot with the internet is a lot more intelligent than one without. Two-thirds of customers research prices and products online before making in-store purchases, according to Whisby. Similarly, two-thirds of customers check prices on their smartphones while in the store to ensure they’re getting the best deal.
An even larger portion of young people, almost three-quarters, do research online before entering a brick-and-mortar store.
What does this mean for your business?
It means you can stop expecting the same great results from old marketing techniques.
A store with mediocre sweaters could once mark them up and then say, “Hey, these great sweaters are now marked down 50%.” In the online marketplace, the consumer knows the truth. Those sweaters were never meant to cost $70. That’s why every retailer is selling them for $35.
Sales have many purposes, and sometimes stores are honestly trying to move out last year’s model or vying for customer loyalty, but they’ve been implemented dishonestly for a long time. Sales attempt to get consumers in the store by communicating a benefit (true or otherwise) to the consumer. They’re a marketing tactic.
But hosting sale after sale after sale doesn’t work anymore. Now we’re just lowering our own value.
As marketers and business owners in the online marketplace, we have to realize our customers are smart, or at the very least, informed. Our marketing must be honest and maybe even straightforward.
Consumers are looking for us to communicate our actual benefit up front, and then they want us to back it up.
Is your benefit a quality product?
Value your customers by telling them why you invest more money to provide them with a better product than your competitors. Value your product by placing a premium price on it. If you claim your phone is better than the iPhone, but you’re selling it for half the price, I already don’t believe you because you don’t value your own product.
Is your benefit a lower price?
Value your customers by telling them the truth. You cut costs at the manufacturing level so that you can pass those savings along to the customer. If you say your product is the best while cutting costs or selling it at rock-bottom price points, I already don’t believe you.
Maybe your old tactics are still working. That’s fine. Just know this: There are very few uninformed idiots left.
Every day your customers have access to more information than ever before. They know the truth. Engage them honestly, and they will reward you.