The lure of online vouchers

It started as a trickle, but over the past week it intensified into a daily flow of online discount vouchers.

The first to arrive was a 20% offer from Borders, inviting recipients 'to share this offer with your friends and family - simply pass it on'. Within a week, the self-appointed discount distributor in the Marketing office had received and escalated offers from Kurt Geiger, Thresher, Urban Outfitters, the Conran Shop and Origins.

The Thresher offer, of 40% off all wine and champagne, has gained a degree of notoriety over the past week, with the firm claiming that response to the offer has spiralled out of control and could affect its profit margins.

It would be easy to condemn the Thresher discount as another Hoover free-flights fiasco: the promotional product of a short-sighted business that failed to anticipate the level of uptake for its offer, and worse, of the power of the web to multiply the damage exponentially.

But wait, what's this in the small print - a 10-day limited offer, with a maximum spend of £500, limited to branch-held stock only? Hardly the sort of damage-limiting conditions that a naive retailer would absent-mindedly tack on to the end of its suppliers-and-friends voucher.

The Thresher incident is neither a mistake nor a conspiracy - although by the time the offer is up, the company will have gained acres of free publicity and shopper traffic from the presumed promotional disaster. In truth, the discount is just a few per cent shy of the three-for-two offer already available in-store; the most serious concern for Thresher management will have been whether they could have achieved the same effect at a slightly lower discount level.

What is true for Thresher holds for the many other retailers circulating 'friends and family' discount offers. The vouchers have been carefully considered and constructed with limited-time offers of sufficient discount interest to drive consumers to those retailers at a time when there is a lull in Christmas shopping.

British Retail Consortium director general Kevin Hawkins has warned that seasonal shopping will not pick up until the final 'two weeks to 10 days', which is two weeks too long for retailers to sit on their hands and hope for the best. Figures from research group SPSL show that in November, its Retail Traffic Index fell by 4.9% on November 2005 - though, again, it expects 'well-documented behavioural changes in recent years' to deliver reasonable, though not exceptional, results once the final figures are in.

The behavioural changes, as SPSL politely puts it, have been due to the rise of consumer brinkmanship, which has seen shoppers simply refuse to budge until retailers lose their nerve and start their January sales in mid-December.

This year has been slightly different. The online discount vouchers are one facet of smarter Christmas retailing that has seen companies employ promotional devices that can turn up the heat just enough to deliver spikes in sales as and when they are needed.

Thresher and others taking this route may find it harder to anticipate the overall volume of spread and uptake, but they are far from being unwitting victims of digital communications anarchy. They are stealing seasonal share from competitors that are still using slow and blunt discounting methods.


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