The Discount Economic Indicator

As I mentioned in an early post (and as is obvious to most everyone) retailers have been using sales/discounted items to try and entice customers to keep buying during these rather tough economic times. Walking through a mall it is tough to get a look into a store because of all the discount/sale signs cluttering the front windows. You can practically see the invisible hand lunging out and grabbing at people's wallets as they walk buy.

But, according to my freshly developed economic measuring tool - The Discount Economic Indicator, we may be starting an upward turn. Now my tool is not something Al Einstein would be proud of, and really when you think about it, its just me taking notice of one thing. In fact maybe I should call it the Banana Republic Economic Indicator, because it is based off of the email flyers they send me. Here's a breakdown of how it works:

• The higher the discount they offer me, the worse off we are economically

Simple eh?

So here's what i've seen so far:
1. First signed up: 10% discount and let me know when new items arrived
2. Last fall: 20% discount flyer
3. Christmas: 30% off flyer
4. Christmas: 40% off flyer
5. End of winter: 35% off flyer
6. Spring: 30% off flyer
7. Today: 20% off flyer

Now i'm sure everyone will want to pat me on the back, call me a genius, and give me an honorary doctorate, but it is interesting to see how their sales have pretty much followed the economic outlook for Canadians. Plus, good work by the marketing team at Banana Republic to continually offer sales to their best customers (the ones that gave them their email) encouraging them to buy.

Although I stand by my Discount Economic Indicator, i'm not quite as optimistic about the economy rebounding this quickly and I think we have some more downtime ahead, but this appears to be a good sign.

Sales promotion a true art form

With the recession in full force across North America it is tough to walk down a street and not see some kind of sign in a businesses window offering a sales promotion to entice prospects into purchasing. But what happens as we start to work our way out of the recession? People will have become addicted to sales because thats all they will know. Will there be a worldwide Intervention by major retailers to inform you that the sales no longer apply???? If so, I hope Jack Von Vonderen runs it, now thats an interventionist. Great mustache too.

What is the effect that these sales promotions will have on a company's brand image?

For example, I am part of Banana Republic Canada's e-mail database and they send me information on sales, etc. For the first 4 to 6 months that I was on the list I got maybe one offer for a 20% off one day only sale, which still seemed like a good offer. They make good quality, fashionable merchandise, at a mid-level price. There clothes are not cheaply priced, nor are they in the league of a Harry Rosen. That was until now. In the last 3 months I believe I have gotten at least one offer every month for a MINIMUM of 30% off, most of the time for an entire week or weekend.

Now obviously most people understand why they are doing this, the economic times mean you have to entice more consumers to purchase your products to meet your organizations sales goals. So you put items on sale and get more people in the door that way, including those that are not usually your regular market.

So what does that mean for the future, does this erode Banana Republic's brand image now that more and more people can afford to buy it? What happens when the sales dry-up? How many customers will they lose and will it lead to a counter-effect where they need to start producing clothes cheaper to hold on to these consumers that expect their items to be cheaper.

I assume there is quite a struggle going on between marketing and the sales teams at Banana Republic these days, but it is probably overshadowed by the increased volume they do everytime they push out another sale. I just wonder what the future consequences may be.