December 14, 2022

Discounting by Merchandise Class

Here's a fun one for a merchandise category recently analyzed. The metrics below show the percentage of sales attributed to items selling below their historical average price point.

  • 31% for this year's merchandise class.
  • 36% for last year's merchandise class.
  • 30% for merchandise class from two years ago.
  • 29% for merchandise class from three years ago.
  • 20% for merchandise class from 4+ years ago.

This data is interesting. Items being sold from merchandise classes 4+ years ago are not being discounted. Items from the class two years ago are being discounted the most.

The stuff that is still selling from 4+ years ago tends to be best items, and therefore those items do not need to be discounted, do they? 

In my work, it is common to see one (1) merchandise class discounted more than other classes. You've been there, you know why this happens ... there are cases where a merchant is fired, and the new merchant just doesn't like what the prior merchant sold. Consequently, the prior merchant's items are discounted ... get rid of 'em!

Of course, there is a customer aspect to this dynamic. As a brand clears out of a merchandise class, the brand creates a customer who wants to buy the merchandise being cleared out, and wants to buy that merchandise at a discount. What happens to the customer who buys merchandise being cleared out at a low price? Often, that customer becomes less responsive.

No comments:

Post a Comment

Note: Only a member of this blog may post a comment.

Cost Differences

Do you remember Bernie Mac in Oceans Eleven ... negotiating van prices? Muttering nonsense about Aloe Vera while squeezing the sales dude...