• End-of-season sales 2021 strategies are the reflections of agilities from the retailer’s side
• France’s strategy was to decrease the share of discounted reference while increasing the average discount rate, offering more incentive to buy to its consumers
• Italy’s end-of-season sales strategy was the opposite of France, favoring more diversity in terms of choice but at a lower average discount rate
• Spain decided to decrease the impact of promotions in favor of full-price articles by decreasing the share of discounted articles and the average discount rate as well
With the changing of the seasons comes the clearances. Every winter and summer, the discount season starts, and 2021 is no exception. But with lockdowns, curfew, and other coronavirus-related restrictions in place, attracting customers is trickier than ever. How did the fashion industry manage the end-of-season sales in this unprecedented situation?
Fewer New Arrivals in Winter 2020
Flexibility and agility were the themes for 2020. As many insiders predicted, retailers reduced their incoming of new arrivals for the winter collections.
Despite this change, some big-name brands — such as H&M — did not follow the market trend and instead increased their new-arrivals numbers slightly. Did this strategy affect end-of-season sales results?
Italy: More Articles Discounted — at a Lower Average Discount Rate
The big-discount period in Italy lasts throughout January; the country’s only particularity is that the starting date differs from region to region. This is something retailers need to keep in mind.
According to Retviews data, the Italian market opted for an increase in discounted references compared with 2020. Top players Zara and H&M, for example, seemed to once again adhere to different strategies.
However, H&M took the opposite track regarding its average discount rate. Compared with its main competitor, Zara, and the rest of the market, which chose to decrease the number of discounted articles and increase the average discount.
Spain: Fewer Discounted Articles and Lower Average Discount
Spain is among the European countries that have suffered the effects of the Covid-19 crisis the most. In terms of timing, the Spanish’s end-of-season sales last longer than in other European countries — it starts around 7 January and lasts through the end of February. This time period remained the same in 2021.
The Spanish market decided to largely favor full-price over markdowns during the discount season. Was this part of an ongoing strategy or a way to cope with the corona crisis and reduce the cost of reductions?
Thanks to Retviews data, we observe a decrease in the number of articles discounted combined with a drop in the average discount rate.
Differences among top players were observed in Spain, similar to what we saw with Italy’s leading brands. Surprisingly, Spain’s results differed from outcomes in the Italian market: Spanish giant Zara took the opposite track from what we observed overall.
The top Spanish brand greatly increased its average discount rate, while other players — such as its main competitor, H&M — made noticeable decreases in average discount rates. What could justify this strategy, especially with the knowledge that prices are already significantly lower at Inditex brands in their home country?
France: Fewer Articles in Promotion — but Higher Average Discount Rate
Unlike other European markets, France decided to postpone the end-of-season sales period, which normally kicks off the first Monday of January and lasts through the end of the month. This year, the government decided to push the start of the season to 20 January and extend it until 16 February, announcing that this period would last through the end of February.
Then, in terms of strategy, France didn’t follow its European peers. As the number of new arrivals decreased, so did the share of discounted articles.
However, France’s method for attracting customers was to increase the average discount rate. This means a higher cost of reduction but might help to increase sales. Was it efficient for retailers? We’ll have to wait and see.
For this article, Retviews focused on the first announced period (20/1-16/2) to have a more or less comparable period to 2020.
Disparity Among Countries, but Harmony on the Brand Side
Countries have different laws and policies by which retailers need to abide. This makes it extremely difficult for fashion brands to apply one end-of-season sales strategy for all markets. The Covid-19 crisis has reinforced this need for localization in the fashion industry. Even in Europe, a markdown period that was once very clear became totally different from one country to another.
However, Omni-strategy seems to be the one big retailers want to follow. Indeed, both Zara and H&M harmonized their strategies to include the same discount level and amount of product discounted. One question arises: are the same products discounted the same way in different countries? Retviews data can help decipher this issue.