We’re doing our first ever sale on the PS Shop today. I thought it would make a good subject for a post as well, as I find the psychology and perception of sales interesting.
People that are into crafted clothing (such as myself) are naturally sceptical of sales. There are multiple reasons, but the main one I think is that we’ve grown up seeing big brands do big sales (a lot of their stock) very often (in the middle of seasons) at big discounts (up to 75%).
Combine this with stories about brands making products specifically for outlet malls (which certainly happens) and it’s hard not to feel that sales reveal the true value of the clothes, which is much less than the ticket price. Brands are dishonest, and only a fool would buy outside the sale.
Now here’s the flip side – a view from someone who started as a pure consumer, but has now run a shop for almost 10 years.
If the ultimate profit margin you make on a product (including lost packages, credit card fees, fuel surcharges and all that rubbish) is around 20%, then if you sell 80 of the 100 sweaters you bought that season, you make no money.
You don’t make 80% of the profit, you make nothing, zero. The sales mean you’ve managed to pay all your costs (and so not lost money) but all the profit is sitting there in those last 20 sweaters.
Given this, it’s understandable to try and sell some of them at a discount. Otherwise you won’t be able to pay yourself, or indeed buy any stock for the next season, when you have to do it all over again.
Even on sale, you won’t get rid of everything. Because there will always be something ridiculous left like 11 XLs and nothing else. It always seems to happen, no matter how carefully you analyse the statistics.
There are a few subtleties to this.
One is that we’re assuming you only sell the product for one season. That’s usually the case with fashion brands, but not with classic menswear ones. If you sell for multiple years, you can just carry across stock to the following year.
The flip side, though, is that if you want to keep something in stock most of the time, you effectively have stock that’s always there, that you can never sell, a pure sunk cost – until you eventually discontinue the product, which could be years later.
These are some of the reasons a sale can make sense. And sometimes menswear brands start with the idea of never discounting, but end up doing so when they realise the economics. Private White VC did that years ago, and Anderson & Sheppard now have an ‘odds and ends’ section of their website that specifically reflects this.
It also brings us onto discussing the kinds of sale – and the dangers inherent in each.
There is a big difference between putting one coat on sale in XXL after offering it for three years, and putting the whole of your stock on sale at the end of every season.
Sales should probably be evaluated in terms of those factors:
- How often they are (once a year, twice a year, every bloody month)
- How much stock they include (it varies from 1% to 100%)
- How big a discount there is (also varies a lot, from 25% to 75%)
Brands used to hold ‘sample sales’ that were actually samples – pieces that were made during the design process but never went into production. Today a ‘sample sale’ can mean just a normal sale of entirely normal stock. Except maybe it’s sort-of-hidden somewhere, like in a different building.
It’s one more thing that makes people cynical, and think all brands to some extent dishonest.
This difference between types of sale is what determines the effect on a brand’s reputation, for me.
The reason to avoid going on sale too often, with too much stock, or too deep, is that customers will start to just wait for the sale. If the thing they want is always in the sale – and so they never miss out on it by waiting – why would they do anything else? They also start to think of the value of the product as being that discounted price.
These days I find myself buying more things at full price than I used to – because I can afford it, but also because I don’t want to wait for the sale and then miss out. I need fewer things and fewer things are really special, different to anything I’ve seen before, and so not easily substituted by something from another brand or in another season. I buy at full price so I don’t miss out, but I wouldn’t if I knew it was going to be on sale in a month’s time.
This also brings up whether sales are good for bringing in different, less affluent customers. A well-done sale makes you more accessible, gives them a way into the brand, and chances are they have more holes in their wardrobe so they’re less fussy.
Given all this, when we decided Permanent Style should do a sale for the first time, I wanted it to be limited in the ways set out above. It will be:
- Only once a year (January)
- Only products that are being discontinued (rare for us)
- Only at 30% off (hopefully enough to make it attractive, but not enough to suggest lower value)
There are several reasons we haven’t done sales in the past. One is that we were smaller and there weren’t that many products that had run a long time. Another is that we often took small amounts of stock and sold out of them quickly. Buying more means it can be available for longer, to more people, but also makes it more likely to have too much, in an awkward set of sizes.
Doing the sale each year will hopefully mean good clothes go to good homes, with people that maybe couldn’t afford them otherwise. The last thing anyone wants is for these beautiful things to go to waste. And the money will make it easier to introduce new products, or carry a wider range.
The PS sale is only small, as you can see on the page here. Often there’s only piece left (eg in the trench or speckled donegal). But hopefully this piece shows some of the thinking behind it, and you think we’ve struck the right balance.
