Disruption to Markdown Timing: Luxury and premium brands have made adjustments to their markdown calendars, with increased first discounts in April.
Meanwhile, Everlane launched markdowns during the Spring/Summer season for the first time. The number of first discounts in March to May increased tremendously compared to the same period last year.
Targeted Discounting: Smaller brands are more agile and have the ability to pivot discounting strategies compared to larger brands with more complex decision making hierarchies.
Everlane executed different percentages of discounted items for each category. Dresses had the highest discounting at 60%, significantly higher than other categories.
Curated Promotions: As consumers become cash-strapped, discounting will become commonplace – leading to markdown mania. Retailers have to step it up to be more creative in their promotions to foster the enthusiasm of customers.
Farfetch launched a campaign spotlighting smaller boutiques that are worse hit by Covid-19 than bigger brands. Everlane’s weekly promotions on featured items garnered high interest through to its first site-wide sale at 25% off.
Next Steps for Brands
Monitor Consumer Demand: Blouses and Sandals & Flip Flops took the lead in discounting, aligned with the current buy-now-wear-now consumer preference around Spring/Summer styles. Brands should offer shallow discounts on styles which are already driving demand.
Brands need to conduct in-depth analysis on the performance of styles to optimise stock levels. Opportunities can be seized by implementing deeper markdowns on downtrending styles and holding off on or offering shallow markdowns for those which are uptrending.
Tactical Markdown Strategies: In this crisis climate, a high-level performance analysis is insufficient – performance must be scrutinised down to SKU-level.
The data and insights gained from monitoring performance should guide brands into launching tactical markdown strategies such as first discounts, priority by seasonality and SKU-targeted discounting. Next, layer the markdown mechanism with smart and personalised messaging.
Moving Stock to Off-Price Channels: Brand equity is not easily established and can be jeopardised by over-discounting on full-price channels. Brands need to consider moving markdown inventory to off-price channels to protect brand image.