Retailers Selling Less Full Price, Relying on Promotions

— May 18, 2016

Retailers are relying heavily on discounts and promotions thus far in 2016, continuing the trend from the 2015 holiday season of pulling the promotional “lever" far too often, according to the DynamicAction Retail Index: Spring 2016. The findings were released at the inaugural ShopTalk conference in Las Vegas.

Key findings from the benchmark include:

  • Retailers sold less at full price in Q1 2016 vs. a year ago, with full-price sales down 4 percent for the quarter and orders using a promotion up 63 percent. March was an especially promotional month, with an 86 percent increase in orders using promotions compared to 2015.
  • Retailers found it harder to convert first-time buyers into second-time buyers, with those conversions down 6 percent compared to last year.
  • While revenues were up 10 percent in the first quarter compared to 2015, retailers' ability to control profit has been unstable in early 2016. Retail profits were up an average 5.2 percent year-over-year in Q1; however, most gains occurred in January, with increasing volatility in February and March.
“The antiquated strategy of retailers relying exclusively on their promotional calendars to run their operations has fostered an ingrained need for discounts by consumers, who are increasingly being trained to wait for promotions or discounts prior to making a purchase," said John Squire, CEO and co-founder of DynamicAction. “The very best retailers are preparing right now to answer customers' needs and beat shareholders' expectations during the holiday season of 2016, by focusing on curbing the promotional addiction and utilizing their full data set to better manage inventory and operations."

The DynamicAction Retail Index: Spring 2016 is an analysis of more than $5 billion in consumer transactions which benchmarks retail trends in key categories from January-March 2016 in comparison to the previous year.

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