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“Struggle” is an understatement when describing the state of the retail market. The retail landscape has changed, and with a rising number of bankruptcies, store closures and layoffs, the end seems nowhere in sight. While the focus has long been on maintaining an omnipresent retail channel, integrating new technologies and creating a unique shopping experience, these factors serve only as a bandage over a much larger issue: Consumers in the U.S. have become conditioned to only buy what’s on sale.

According to a study conducted by First Insight over the past holiday season, 70 percent of consumers expected to see markdowns of 31 percent or more when they walked into a store or shopped online. Even more indicative of this shift, one-third of all shoppers visiting retail channels were looking for 100 percent of their purchases to be made on sale.

Given these metrics, there are no gimmicks or technology that could change how the modern consumer is driven by discounts. It’s up to the brands themselves to regain control and recondition the consumer to not be solely driven by the lowest cost.

So what can retail brands do to change the behavior of the consumer? Here’s a three-step plan on how brands can start to “retrain consumers” to buy at full price — and put a stop to the never-ending sales cycle that currently exists in the market today.

Step One: Right-Size Inventory and Distribution

This might go unsaid for many, but it’s never been more important for brands to know their customer. Use historical sales figures/trends to help dictate the quantity of garments produced. In the case of the current economic climate, I think less is more. Regardless of whether or not the sell-through rate stays constant, if fewer garments are produced, there will naturally be fewer products to discount.

Though producing fewer products may initially lead to less sales, it will enable brands to have greater control over the supply and demand of their products. If demand is high enough, discounting won’t be as prevalent. The worst-case scenario here: The brand sells out of the product before they hit heavy markdowns.

Just as important as producing the right quantities is controlling where the product is sold; make sure the stores selling the product are the right fit for the brand. Once again, the less product produced/distributed will leave fewer unsold garments at the end of each season.

Step Two: Limit Discounting

While discounting is the predominate driving force behind retail sales, it has to stop somewhere. The existing market conditions are not sustainable and leave brands eroding their margins, damaging profits and even worse, devaluing the brands’ worth. Brands need to negotiate stricter terms with department stores and wholesale accounts as to when and how their product can be discounted.

Step Three: Value Proposition

“Why do I want to buy from this brand?” If the consumer can answer this question, then the brand is doing its job. With increased competition from new brands and aggressive pricing, brands need to adequately express their value to the consumer in order to differentiate themselves. In today’s market, it’s not just about the quality of a garment or the fit, but also justifying the value of the product.

Does the garment last longer? Is it higher quality? Educating the consumer and having knowledgeable salespeople will not only differentiate your brand, but will also drive sales by helping the consumer justify why they should pay a premium for your product.

Putting it Together — A Dose of Disappointment

Modern consumerism is a new form of addiction and discounts are a consumer’s drug of choice. Going cold turkey and removing discounting altogether isn’t realistic, but slowly weaning consumers off of the sales they’ve grown to love is a must.

So how does this tie in with disappointment? Imagine you walk into a store and find a garment you like. Statistically, most consumers now prefer to wait for the item to go on sale before making a purchase, but by the time the price is finally reduced to their liking the garment is already sold out — leaving the consumer disappointed.

Through repetition of the scenario above, consumers will be forced to rethink how and when they purchase a garment due to the fear of not being able to buy it at all. While in the short-term, consumers may find less expensive alternatives, the current discounting trends are unsustainable. Contrary to the popular belief that the customer should always be satisfied, in this case I think the opposite: Disappointment can save the fashion industry.

Jordan Barker is principal at Bark Equities.

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