The Pros and Cons of Sale in Retail

When the economy weakens, the first thing to go down is customer spending. People choose to save more and spend less, which can have a detrimental effect on the retail sector. Luckily in Dubai, the amount of tourists coming to the city purely for shopping is constantly strong, and allows our shops to thrive even if our residents reduce their shopping habits.

For those retailers that suffer lows, it’s important to know eactky what can be done to encourage people to continue shopping. Many would automatically jump to reducing prices, but can this have a negative affect on your brand? We look at the pros and cons of having sales in retail.

Advantages:

-      Increased customer spend

Generally when sales are on, people venture into shops more. For example, Dubai Shopping Festival, which takes place every January/February, averages AED15 million of extra retail revenue from its sales and promotions. Most of the time shoppers will be more likely to head out to the malls if they know they will receive a bargain, especially when times are tough. Without having sales on, these people may never have come to your store.

-      Brand Awareness

When a sale is on and customers enter, their word-of-mouth influence is extremely powerful. If happy with the sales and their purchases they will spread the word that the sale is on and encourage others to check it out. The fact you are having a sale can also be used as a marketing tool to target new customers or receive media coverage.

-      Upsell and cross-sell opportunities

Having a sale is a way of bringing people into your store, but once they are there you have the opportunity to upsell or cross-sell other products. Once they are in the shopping mood they are more likely to look at other products in store, even if they are not reduced.

Disadvantages:

-      Negative brand reputation

When having constant or regular sales, the reputation of your brand will lower. If people think the product is cheaper or accessible, it will make it less desirable, especially if your brand is mid to high price wise.

-      Product damage or theft

Although theft is something not seen very often in Dubai, it is more likely if your store is on sale with many customers inside. When a good sale is on, it can become chaotic, and products can either be damaged or stolen without staff being able to do anything to stop it.

-      Other costs

During sale periods you will lose money from other costs, such as additional staff, extra marketing and branded collateral. When your store only partakes in a sale once or twice a year, these costs are kept down, but when the sales become more regular these can eat into your profits.