US Retailers' Discount Leads To A Vicious Circle. What Does It Depend On Discounts?

Recently, many American retailers are selling poorly. Due to the decline in consumer demand, US Department store sales in the first quarter of Macy's2016 decreased by 7.4%, achieving quarterly sales of five consecutive days.

Retailer Nordstrom's performance was also unsatisfactory, with comparable sales of full price businesses down 4.3%, and Nordstrom's share price plunged more than 15% after the earnings announcement. Jeweller Tiffany even called it the quarterly decline since the global economic crisis began in 2008.

So, some retailers began to use "discount" to attract consumers. Their idea is very simple: consumers will not be satisfied with tradition.

A quarterly clearance sale, but rather low price every day, why not sell department stores in a cheap way?

Unfortunately,

With the rise of technology, the development of online and offline sales, consumers today are no longer the same. The consumer market is no longer entirely controlled by retailers. The desire to rely on discounts to boost sales may never be realized.

Discount leads to a vicious circle.

Businesses have successfully trained consumers to be customers who only appear in the discount period, causing their operations to fall into a vicious circle.

The reason why US business news BusinessInsider is "discount" has made traditional retail industry in a dilemma.

Discount is one of the main methods used by traditional retail businesses to attract consumers, but BusinessInsider thinks that the discount behavior of consumers has spoiled consumers, and they have developed the habit of shopping only during the discount period.

Because of the discount, businesses have successfully trained consumers to be customers who only appear in the discount period. This phenomenon is causing their business to fall into a vicious circle.

In the past, consumers were willing to pay more premiums for new products, and were willing to shop in traditional department stores out of consumer experience and quality of goods.

But now the situation is, when consumers produce most goods will have a big discount sales expectations, are they willing to buy at full price?

The executive director of Mizuho Securities said that the discount mode raised consumer expectations, giving them a discount of at least forty percent off or thirty percent off.

Now it is becoming more and more difficult for consumers who are accustomed to discount to buy full price goods.

The discount mode has caused many retailers to enter the dilemma between maintaining brand style and letting customers consume more.

The fashion brand J.Crew is an example. This autumn, J.Crew will launch a new series of clothing, which has been well received in New York fashion week in February.

But once consumers realize that J.Crew is just a discounted retailer, they may not be able to buy new products of J.Crew as they did in the past.

At the same time, for retailers themselves, the discount mode will lead to price war, so that traditional retail brands will be in a difficult position. Nordstrom, a high-end fashion retailer, will suffer greatly.

In fact, the discount mode is more suitable for Zara and other fast fading industry brands, because these brands have their own supply chain and can react quickly to consumers' preferences.

By contrast, traditional retailers do not possess this capability.

Obviously, not all retailers have Gao Min's sharpness and mobility similar to the fast fashion brand.

At the time when customers of non Fast Retailing traditional retailers are losing day by day, both the industry and consumers are sacrificing their quality requirements.

BusinessInsider quoted the CEO att pate of Gap, one of the largest clothing companies in the United States, "it's really hard to pull customers back from promotional activities now.

If retailers start tightening up promotional activities, it's like playing hawks with consumers. Now we have seen such a situation.

According to the British report, consumers and major brands are not fully able to get their own needs. The uncertain factors of consumption lead to confusion in the retail market, and retailers increasingly feel inadequate.

May 23rd is the memorial day in the United States. Traditionally, festivals celebrate sales and shopping, but American retailers do not enjoy it.

On the surface, the US economy is recovering: low interest rates, low unemployment and low oil prices.

Coupled with discounts, it seems that none of these can boost consumption.

US data released in May 31st showed that the US consumer confidence index was lower than expected in May, and many consumers believe that the US economy will be uneventful in the next few months.

The detailed data are: the US consumer confidence index in May was 92.6, the lowest in November last year, lower than expected; the consumer confidence index is 112.9, the lowest since November last year; the consumer confidence index is 79, the lowest since February 2014.

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Do not rely on discounts?

Usually, while compressing costs and expanding the scale of operation, enterprises forget who the customers are.

Researchers say consumers and major brands do not get what they want: consumers do not want to spend money on brands that are not valuable to them, nor do major brands build customer loyalty.

There is a clear contradiction between the healthy development of the economy and the unpredictable consumption expenditure.

Professor Kit Alo, a consumer psychologist at Golden Gate University, says we can no longer estimate consumers' confidence and desire as they used to, but start to look at consumers in a completely different way.

The rapid development of technology has completely changed the shopping habits of consumers. They have never controlled the entire retail market as they do today.

So some retailers began closing stores, and some retailers relied solely on "price" to survive.

Abandoned by consumers is because you want the money, but it can not give consumers the value they need.

Kit Alo pointed out that retailers should always realize that consumers always want to see new products when shopping, which is the product of technology.

People are eager to see more exciting products in their lives.

People would never go to the store if they didn't have enough to attract them.

What is enough to attract people? Experience.

Only a good shopping experience is the weight of traditional retail competition.

Stuart Aitken, chief executive of Texas technology consulting company, said that companies usually forget their customers and their real needs while reducing costs and expanding their business scale.

Using information technology to return to the world of consumers, whether it is to pmit more valuable commodity information through mobile applications, or to create new and interesting shopping malls, and to save traditional retail industry, we must first return to the source of retail business.

What is the source of retailing? - a grocery store opened on the corner. The boss knows all the neighbours and knows everyone's situation. He knows how many people there are in his family, what kind of food he likes and how much he can eat in a month.

Then summarize these requirements, and then purchase.

Retailers should not only compete on scale and supply chain, but rather establish their brand image in the minds of consumers.

Once, the most understanding of the needs of customers is the traditional retailers, if the current retailers want to get out of the dilemma, the most important thing to do is to return to the source.

GreenHills in the US is a technology upgrading grocery store.

It uses the advanced payment and marketing system of biometrics. Once the consumer's records are sent to the database of the network terminal, customers only need to touch the scanner with their fingers when they shop at the store every time. The instrument can print out a list of coupons made according to the shopping record in a few seconds.

According to statistics, this project has increased the turnover of stores by 50%, while the patronage frequency of customers has increased by 10%.

Data collected through technical means can not only provide valuable information to consumers, but also make effective brand combinations according to user information.

The core competitiveness of traditional retailing in the new era is how to organize consumers of different styles to meet different needs. At the same time, they should organize their own sources of consumption according to their own consumption groups to form a unique style.