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Retailers risk losing the discount war without an omnichannel commerce platform

| International retailers

NetSuite, a provider of cloud-based financials / ERP and omnichannel commerce software suites, has released the results of a study conducted with retail research firm, Planet Retail, which reveals the negative effect discounting has on UK retailers’ overall profitability, costing them £38bn in lost revenue and UK PLC £20.3bn in GDP contributions.

The study indicated that discounting is here to stay. But price wars that erode margins and entrench consumer expectations necessitate obligatory and unsustainable markdowns. Retailers surveyed agree they need better visibility into their entire retail operations to create profitable discounting and promotional strategies in the long-term. 


The research study, ‘UK Discount Pricing Strategies’, surveyed 150 of the UK’s leading retailers and 6,000 consumers on the impact of current discounting strategies in the UK retail sector. The report found:

  • Fragmented and disparate systems cannot provide a single view of inventory, sales and customer data, making it difficult for retailers to deliver sustainable and profitable discounting and promotional strategies that include personalised or location-based discounts and offers.
  • 66% of retailers researched agree omnichannel systems that offer a single view of customer, orders and inventory would advance their business.
  • The warnings of a growing number of industry stakeholders, including John Lewis and Asda, question the long-term viability of events such as Black Friday and Cyber Monday.

Miya Knights, Planet Retail Research Director, commented: “With access to real-time inventory data, retailers can compare modest markdowns early in the season against deeper reductions later on to maximise revenue and expose unsold merchandise. Value-based promotions drive sales and improve price perception. Irrelevant promotions lead to lower sales or require deep discounts that destroy price perception and margins.”
 
Mark Woodhams, Managing Director, EMEA for NetSuite, added: “Discounting is a necessary evil that isn’t going away. However, retailers that can execute on personalised discounts, offers and promotions can win over UK shoppers. Unifying the back-end of retail operations with front-end, customer-facing systems helps retailers improve business viability, profitability and customer satisfaction with timely, targeted discounts.” 

NAM Implications:

  • Buffering is necessary to accommodate inefficiency
  • Buffering is the use of unproductive resources/assets, not earning money..
  • An effective single view of the total system removes the need for buffering, leading to increased profitability…
  • A no-brainer?
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