A growing pile of evidence supports a grim conclusion for clothing retailers: Customers are no longer willing to pay full price when they go shopping. A new piece of research shows that 45% percent of American women need to see a markdown of 41% or more to even enter a store, according to a First Insight report (highlighted by Footwear News).
First Insight is an analytics firm that provides insights to a range of brands and retailers—including Caleres, Dick’s Sporting Goods, Desigual, Home Shopping Network (HSN), and Pier 1—by gathering data through game-like surveys on products before they hit the market. The firm surveyed 1,303 American consumers online to analyze how shoppers respond to retailer discounting strategies, and published the results in a January report titled “Markdown Mania.”
An average consumer was willing to pay only 76% of the full price, the firm found when testing reactions to womenswear products between January 2013 and June 2016. Two-thirds of shoppers would rather buy their products online over brick-and-mortar stores, once they noticed bigger markdowns online. Depending on the product category, between 80% and 90% of both men and women expect discounts from departments stores and merchants.
The firm blamed the brands, to some extent, for customer’s attitudes, noting in the report that consumers are not seeing enough value in products to pay full price. While deep discounting is not new—last year NPD Group found that 75% of US apparel purchases across all retail channels came from consumers who also shop for clothing at off-price stores—the situation is increasingly dire for brick-and-mortar retailers, amid of a wave of store closures and talk of a retail bubble.
First Insight’s chief commercial officer, Jim Shea, told Quartz consumers are experiencing “sale fatigue,” with all the real and made-up occasions for sales, including anniversaries, Singles Day, Black Friday, and Cyber Monday.
“Ultimately, brands and retailers need to get out of this discounting spiral,” Shea said. “I think that it’s a sort of drug that the consumers are becoming somewhat numb to, and the retailers are going to have to find other ways to get people to buy.”
Of course with smartphones, shoppers also have at their fingertips a wealth of information that can help them comparison-shop for a good price, check online for different sizes, colors, or styles, or search for a coupon or discount from a different store. In pursuit of a good sale, 39% of shoppers are willing to travel to another store to see if they can buy the same item for less, First Insight found.
Shea said retailers’ best path forward is to focus intently on “product differentiation,” offering something that is not available anywhere else, that customers value and are therefore willing to full price for.
“You can have the best stores, the most sophisticated e-commerce system, the most advanced supply chain, and the best store associates,” Shea said. “But if you don’t have the right product, none of the rest matter.”