The management team at Myer has admitted that they cannot break the habit of discounting – shoppers will not let them. This story got a good run in newspapers around the counter yesterday, that Myer tried to pull back on discounting but had to reinstate the tactic to stop sales erosion.
In the various stories, Bernie Brooks, Myer CEO, focuses on two key issues – that shoppers prefer stores with discounts over stores selling at regular price and that the interest rate rise of earlier this month will make for a very tough Christmas.
Talking with newsagents this past week, there is nervousness about when Christmas will kick in. I am seeing some movement in the sale of boxed Christmas cards, especially those connected with charities. I am also seeing good sales for unique gifts – we have had to reorder which is a good sign. While I have reservations about the interest rate rise, now that all four major banks have hit borrowers hard, I am cautiously optimistic for Christmas.
Newsagents tend to not have a discount strategy. This could be why shoppers see us as expensive. In our own situation we combat this with our regular newsXpress HOT Ink! promotion, a card loyalty program and our Magazine Club Card. The first draws plenty of new traffic and the next two encourage customers to purchase more than average. All three help us attract shoppers looking for discounts.
Newsagents need to have a plan to connect with the shoppers looking for a deal. If there is no such plan then you cannot expect anything beyond the average and in today’s marketplace the average does not cut it.
This is what makes it difficult for us. All of this discounting going on and we wither join in or get crushed in the stampede.