As John Lewis Partnership and Marks and Spencer Christmas sales figures are announced I am reminded of how even large retailers can misinterpret the concept of value.
JLP department store Christmas period sales were 5% up whilst M&S report a 5.8% sales decline in general merchandise. There are many factors for this comparative variance, however critical commentary highlights a difference in “value” approach between these two retailers. JLP chairman Charlie Mayfield points out that their “never knowingly undersold” ethos is combined with a mix of consumer value propositions.
There are five tactical approaches to offering promotional values;
More for less, More for the same, Same for less, Less for less, Lots more for a little more.
We know that we must offer financial incentives to attract and retain value conscious consumers. More for less, More for the same and Same for less are discounting approaches you find everywhere; BOGOF, 3 for 2, buy one get one half price, 20% off etc.
Less for less offers discount but with a smaller product pack quantity to present an illusion of better value. You will find this concept in discount stores. As an example, discounted vitamins are on supermarket shelves but on closer inspection some packs contain fewer than the expected 30 tablets. Independent retailers are increasingly competing against this questionable pricing tactic.
The most interesting concept is Lots more for a little more. With the growing trend in “Value Pampering”, consumers are prepared to pay more for better experiences. This is evident in the holiday and coffee shop markets with cruising increasing by 44% since 2008 and a 10% year on year café culture market growth.
These two concepts turn discounting on its head. On first observation the Secret Escapes concept of offering price reductions on 4* hotels could be considered a discount approach, however the approach is more about enticing consumers to trade up to 4* from 3* for a higher level experience. This is clearly a “Value Pampering“ Lots more for a little more concept.
Financial value concepts such as discounts must be accompanied by a superior experiences value mix. Offering ideas, stimulation, interaction, relaxation and a fun shopping experience to your customers will expand your value mix.
Comparing JLP and M&S, most would agree that JLP offer the more complete values mix geared to 21st century consumer needs.
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By John Silvestro
Business coach and speaker
John Silvestro started his career in the 1980s as a health foods retail consultant. Since then he has become an acclaimed business coach and speaker, having worked with consumer-focused companies in Britain, the USA, Canada and South Africa.