Fashion startup: when does it make sense to offer a sale

As a small unkown business that is just starting off, the best advice on offering to do promotions, sales, discounts, etc – don’t do it.  Here is why: no one knows who you are or your price points.

Major brands have tons of people watching them, and they charge a premium for their brand name.  They can afford to discount to get rid of old inventory, move slow products, or create excitement around a holiday or event.

Your image is hurt before anyone knows you

But when no one knows you and the first thing they see is that you’re offering a sale on your goods – it cheapens your brand.  Set your price where you need it to be and leave it.

Think of it this way – you’re walking down the street and you come across a new shop.  You enter and immediately see that half the store are items on sale.  What’s your initial opinion?  That the store is doing great?  No, you probably think “this place is doing so good.”

Furthermore, you’ll build a following of people who are buying for the wrong reasons.  You’ll target the bargain shopper, who even if they love your products, will expect to buy with a discount and abandon you when the sales dry up.

JC Penny is an example of a company that had long relied on discounts and coupons, and when new CEO Ron Johnson decided to shift away from coupons and offer items at lower prices without them, shopped lost their ‘discount buzz’ and sales plummette (http://www.forbes.com/sites/panosmourdoukoutas/2013/09/27/a-strategic-mistake-that-haunts-j-c-penney/#7c41d06f3a6c).

Consumers will expect the sale

There is also evidence that discounts of some products can negatively affect the price that customers would be willing to pay for the rest of the products you’re offering.  A study by the journal for consumer interests found that when consumers view discounts, it can lower their threshold for buying non-discounted items.  Essentially, buyers get in the mood to buy something on sale, and then they can’t leave that notion behind and refuse to buy anything that isn’t marked down.

Essentially, buyers get in the mood to buy something on sale, and then they can’t leave that notion behind and refuse to buy anything that isn’t marked down.

The only time it makes sense for an unknown fashion business to put their wares on sale is the following:

  1. You have an end of season stock that you have to get rid of this year.
  2. You have samples from a show or event that you can sell second hand.

If you are a growing business and have developed a dedicated following and you’re wondering when to push sale via your marketing channels, I’d advise that you progress cautiously.  I’ve experienced first-hand the addictive cycle of sales.

We started using bi-weekly promotions with my fabric store (www.MJTrends.com), and after about 4 months of record-busting sales, the numbers started to level off.  However, since our volume of sales had fallen back to normal levels, we needed to remove the sales to stay at the same level of revenue.  We couldn’t sell the same amount of items at a lower price point and stay in business.  That’s when tragedy struck.

Our customers had gotten accustomed to these constant sales newsletters, and they stopped visiting when the coupons stopped coming.  It took us almost 6 months for buying behavior to return to normal.

Lesson learned – now we rarely use sales and coupons to move clearance items that we need to get rid of.

Add value instead of negotiating on price

A better idea is to offer free add-ons instead of sales.  This prevents the consumer from entering the “sales” mindset but has the positive effect of increasing your conversion rate.  An example would be buying low-cost bangles or earrings and giving away a free set to the first 20 purchasers of a boho dress that you’re selling.

Another option is to offer customization services for buyers of season-end fashions you need to move.   You’re adding value instead of taking away on price – and even though the cost to you might be the same, your customers will see it differently and you’ll avoid the pitfalls of sales and discounts.

 

Are you a fashion startup, pattern maker, or otherwise just getting starting in the fashion business?  We’d love to give you some free press or feedback on your business.  Drop us a line and we can set up an interview to post on our blog or meet to review your marketing and business – we love to help!

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