Deep discounting of more than 30% is damaging the relationship between retailers and consumers in the UK marketplace, according to Optimove, a customer engagement firm.
The group made the assessment ahead of a busy week of trading updates from UK grocers, and following the news that entertainment retailer HMV recently filed for bankruptcy.
“Our data shows that discounting above 30% has a negative impact on customer retention," commented Roni Cohen, director of data science at Optimove. "However, struggling retailers are continuing to employ broad-stroke discounting strategies to attract customers during the fiercely competitive Christmas sales period.
Beyond The Promotion
Cohen added that while discounting during the festive period may attract new customers to particular stores, further investment is required to ensure they can retain them beyond the promotional period.
"Retailers should consider a personalised approach that promotes customer loyalty and increases customer lifetime value. Large volumes of sales do not always translate to profit, especially with the number of returns heavily impacting revenue figures.”
Discounting strategies, he argues, must be optimised to bring value to customers and increase retention.
"Using predictive analytics to engage with the customer at the right time, through their preferred channel, with offers that are relevant to each one, will convert one-time buyers into life-long customers.”
© 2019 European Supermarket Magazine – your source for the latest retail news. Article by Stephen Wynne-Jones. Click subscribe to sign up to ESM: European Supermarket Magazine.
