January Sales - Should small businesses cut prices?

Gone are the days when January sales started on New Year's Day. Not that long ago, in 2007, the winter sales made the headlines for beginning on Boxing Day, with esteemed retailers like Harrods notably launching their sales on December 26, alongside many retailers like John Lewis reducing prices for online shoppers.

Now it seems the 'January sales' have instead become the 'Winter Sales', starting as early as mid-December in some stores, as part of a bid to boost dwindling Christmas sales in a recovering economy. There's some argument that traditional January sales are losing importance, as a growing number of retailers bring their sale dates forward to capitalise on the lucrative Christmas market. In fact, the last few years have seen sales kicking off at the end of November with the controversial American import of Black Friday and carrying right through to January.

Successful without discount

Bucking the trend, retailer Next saw a determinedly solid Christmas this year, without resorting to the discounting tactics of many other retailers. A strong online side to the business was a contributing factor to the successful increase in sales; a rise of 2.9 per cent from October 28 to December 24. Despite refusing to discount prior to Christmas, New Year sales were profitable for Next, the company seeing a successful post-Christmas clearance with more stock on offer than a year earlier.

Reinforcing this, John Lewis' managing director Andy Street warned of the hazards for UK firms of focusing too much on one day sales such as the Black Friday phenomenon, instead of the traditional, more drawn out January sales. "We've got to ask if it's right to concentrate trade so much in that one period," he told the BBC, highlighting the pressure Black Friday places on retailers' back-end operations, including deliveries.

Opportunities for SMEs

Regardless of the start date, whether it's Boxing Day or January 1, post-Christmas sales can be an excellent opportunity for retailers to clear out old or seasonal stock. Opportunities to snap up bargains encourage people to spend in a particularly quiet period that comes as a natural lull after the frantic shopping madness in the lead up to Christmas.

For SMEs however, it's prudent to use restraint when reducing prices. Smaller firms should be considerate of profit margins, making changes to just a few product prices, rather than slashing prices across the board, advises boostcapital.co.uk: "A few mainstream products sold at a decent saving to the shopper could attract business, but if you're losing too much money, the real gain to the enterprise will be minimal, if anything."

The importance of marketing promotions

If an SME does decide to capitalise on the New Year sales, marketing correctly is essential. This includes reaching out to shoppers using social media and utilising digital platforms effectively.

Email marketing is also a great tool for informing potential customers, so paying attention to what you send out, and to whom is essential, as email marketing experts Pure360 advise: "Consumers are on the lookout for bargains more than anything else at the start of the year, so make sure that email titles and headings focus on these."

Optimising emails, using segmentation and paying attention to what customers bought in the run up to Christmas can make post-Christmas sales more profitable if the marketing is done effectively. Having a strong call to action on all promotional material is also essential.

Even if a business hasn't run a New Year promotion for 2015, but would like to give it a go, it's not too late. While it pays to be prepared, there's no reason why an SME can't dip a toe in this year to test a promotion out. If it works, or doesn't, then it's all information which can be collated for early preparation next year.

Whilst smaller operators may struggle to capitalise on discount events like Black Friday, Cyber Monday and post Christmas sales in the same way as big retail brands, it's still possible for SMEs to ride the publicity wave of these big, headline-grabbing events.

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