Behind the promise of unbeatable special offers for buyers and additional revenue for brands hides a more mixed reality. Let’s take a closer look.
The first two editions of French Days took place in the spring and autumn of 2018. Initiated by six French retail giants - Boulanger, Cdiscount, Fnac Darty, La Redoute Rue du Commerce and Showroomprivé - French Days have brought together more than 200 websites. The aim of these two editions was very different: to occupy a dip in consumption in spring, between the winter and summer sales, and to respond to additional needs among consumers in autumn.
Halting the fall in retail sales
French Days are intended to address a structural reduction of consumption in retail. According to a study by the firm Simon Kucher & Partners, budget shopping among people in France dropped by 6.2% between 2016 and 2017. Certain sectors have been particularly affected, such as clothing. Sales of clothing brands dropped by 20% in 2018 according to Alliance du Commerce.
By creating regular discount shopping events, retailers hope to increase consumption peaks and halt falling consumption. This has been in vain. The results of this first edition of French Days are mixed. While retail website traffic increased slightly, it remains well below levels recorded during Black Friday (+112%). Worse still, according to the price comparison website Idealo, the increase was smaller for the second edition (+15%) than it was for the first (+22%). In addition to proximity with back-to-school purchases and income tax payment deadlines, these average results are due in large part to disappointing special offers for consumers who are used to significant discounts during Black Friday and the sales.
Discounts: covering up a poor user experience?
Looking at the bigger picture, neither sales, Black Fridays nor French Days are really managing to halt this downward spiral. What's more, price wars have wiped out the margins of many traditional retailers. A number of well-established retailers have gone bankrupt due to their failure to adapt to digital transformation and respond to the growing challenge of user experience. Recently, New Look announced that it was selling off its 30 shops in France. What if the decline of these retail brands was related to the increasing number of such discount periods?
By willingly selling their stock at a loss, and therefore legitimising the demonetisation of consumer products, are retailers not undermining the foundations their businesses are built on? And what if French Days are simply not managing to hide the inability of part of the market to truly grasp the potential of digital experience in the service of unified commerce?
Refocusing the value proposition on experience
The allocation of household budgets has changed greatly in recent years. The proportion allocated to consumer products has gradually shrunk, while the increase in spending on housing, as well as culture and leisure, has gathered pace. Faced with a base that will continue to grow structurally smaller over the coming years, retailers must push back the limits of their constraints and move to a new paradigm.
They must think less in terms of products and services, which they are devaluing by systematically turning to discounts and special offers, and refocus their value proposition on digital experience. Digital experience is a creator of value. It makes it possible to move away from a purely financial approach to the customer relationship, in order to create a stronger brand story, respond to consumers' needs for personalisation and enhance customer loyalty in the face of increasing volatility dictated by sales prices. It enables retailers to find effective ways to meet the challenges created by the expansion of digital marketplaces in today's commerce, led by Amazon and Alibaba.
Responding to a technological deficit by cutting prices does not make sense. These marketplaces are popular with consumers because they offer so many types of products and services and deliver them fast. In a word, it is the experience they offer. The systematic use of discounts can only benefit players who now offer the best experience. Rather than investing in the sale of stocks at a loss, retailers must make user experience their priority area for development, in order to halt this downward spiral and hope to see a brighter future.
Published in LSA