Written by Brook Schaaf
What do fabricated sales prices and shopping FOMO have in common?
The Jason & Scot Show podcast on Retailgeek recently did a preview of holiday season sales with Rob Garf of Salesforce. In brief, Salesforce anticipates 4% sales growth for November and December, peak discounts of 29% (an average across all categories), and 21% loss of online orders due to poor returns experiences.
The episode is packed full of stats and forecasts and is well worth a listen for anyone in the e-commerce space. In particular, “discount chicken,” a term Garf coined some years ago, caught my attention.
In a 2022 interview, Garf explained it as the dilemma of whether buyers “chicken out” by purchasing without significant discounts due to concerns about Christmas shipment delays or inventory scarcity. According to Garf, retailers won in 2020 and 2021 but lost in 2022.
The mention of “chicken” in turn brought to mind a settlement made by Boohoo, PrettyLittleThing, and NastyGal, who were accused of “a deceptive pricing scheme.” This scheme involved displaying “artificially inflated original prices” to create a perception to make buyers think they were getting a better deal than they were.
I confess I didn’t realize this common practice was actionable, but the head of our legal counsel, Gary Kibel, set me straight: “Making people think they were getting a great discount when in reality they are not … is not unusual. It’s actually a fairly clear deceptive practice.” (While he has never said as much, in my heart I know that Gary cherishes my random questions.)
Thus, we might call this a “rubber chicken” — like the kind you might eat at a large banquet where the meal isn’t quite what it was billed as. Perhaps it works as the gag rubber chicken, too. In both cases what you see are pricing strategies set by retailers that can not only impact buying behavior but also violate legal norms. Moreover, in the aggregate, there is an observable wisdom of the crowd with many price-sensitive and observant potential customers moving markets.
The numbers demonstrate the need for merchants to approach pricing decisions with both confidence and caution. The influence on sales is evident, and retailers must navigate this landscape wisely. Ultimately, understanding and adapting to consumer behavior, along with ensuring efficient and strategic distribution, becomes crucial in meeting the constantly changing demands of the market.