When January Sales Don’t Make Cents!

Most retailers realise that the hardest task they are confronted with is generating higher levels of foot traffic. Customers increasingly value their time and think twice before they use this valuable and finite commodity. This is doubly true of male shoppers. But there is one period in the year when shoppers and potential shoppers have an excess of time.

And that is the period in December and January each year when families take time out. For most this holiday is extended for at least a week. For many men, the post Christmas hiatus is the one time of the year where they have the luxury of time to browse, stock up and replenish everything from their clothing requirements to gadgets, sporting goods and more. So if this is the part of the calendar when they have the time to shop why is it that this is the time retailers choose to reduce the entire retail experience to off-price jumble sales?

I was recently standing in a well-known department store watching businessman after businessman trying to buy a sizable amount of apparel. They wanted to spend money – large amounts of it. One by one they simply got frustrated and left the store. They couldn’t find their size. They couldn’t find the colour or cut they wanted. They couldn’t find anything. The customer experience was cut-priced confusion.

And they weren’t looking for bargains. For these men it was the one time of the year when they had the time to buy what they needed and wanted. It was their one time of the year to have their impression of the retail experience confirmed or changed. Needless to say, the experience of the men I observed was a negative one.

When perhaps your only major experience of retail is piled high, red slashes, discount tables, low or no service and no theatrical visual merchandise, is it any wonder that for many men they see little value in spending their time shopping throughout the year. Many men hand off the responsibility for much of the household and even their personal shopping to women because of their impression of shopping when they are confronted with it.

Discounting used to be about genuine clearance (stock close out) and as a weapon to drive foot traffic during low periods throughout the year. Limited stock clearance items placed thoughtfully among full price new merchandise used to be part of clever merchandise management. Today, the post Christmas sales are becoming a period relied upon by many retailers to keep their sales levels high – but with ever diminishing margins. A period not of clever blending of off-price and full-price but one of a mono-syllabic sea of red ink.

And this is being compounded by the rapidly growing gift card phenomena. With 30% compound growth rates, gift cards – increasingly being purchased as a substitute for full-price merchandise and redeemed in January with off-price merchandise – deflate December sales (as the sale can’t be booked until redeemed) and inflate January. Even the unredeemed value on the gift card does not offset the margin loss. Men are huge users of gift cards.

While there is no easy answer here, best practice retailers around the world are now rediscovering the opportunity that actually presents itself when new or infrequent shoppers enter their stores in the January period. Time to take another look at whether your post-Christmas sales strategy is building your future or digging your grave.