As Australian retailers anticipate the lowest selling prices in 24 years this quarter, it’s worth looking at one US setup that almost never puts anything on sale.
US yoga and running gear chain Lululemon sticks to a strategy which allows it to sell to its niche without promotions, discounting or even heavy marketing. It’s called scarcity.
Lululemon simply offers fewer items in its stores to create the perception of scarcity.
"Our guest knows that there's a limited supply, and it creates these fanatical shoppers," CEO Christine Day says.
And even with confidence way down in the States and pressure on the company to move with the herd and look at a discounting strategy, Day says there’s quite simply no way.
"People thought we were going to start playing that game, which absolutely isn't true. You can't blink,” Day says. “You'll either offer promotions or not, and we're in the "not" category.”
While most retailers are using discounting to drive sales, Lululemon is using pricing power to its advantage to keep stock flying off the shelves.
Looking a bit further into the scarcity tactic, Day explained in a television interview on CNBC that it’s all about training consumers to condition them to buy when they see an item rather than wait.
"You've got to shape your buying patterns to respond to that." Day says, adding that "If you're not going to discount you've got to have some bold and unusual things planned, which we do here."
One of those unusual things is hosting free in-store yoga classes (everyone replete with $90 Lululemon leggings of course).
It’s a very different tactic to combat what Dun & Bradstreet’s Danielle Woods says is "a long downward trend that suggests ongoing discounting has become the new normal."
But so far, it’s working, with Chief Financial Officer John Currie reporting that the athletic apparel chain sells a massive 95% of its merchandise at full-price.
And those items are very rarely returned too, in part due to a very strict returns policy.
On top of never putting its core items on sale, Lululemon accepts no product returns after 14 days, and all must be unwashed and unworn, with original tags.
So what’s the key value underpinning this huge successful sales strategy?
"If you want to be successful in this industry," says Day, "it's all about being authentic."
What's your sales strategy? Come canvass it with the KBB Krew!