The Permanent Sale

Jos. A. Bank is running a big sale this weekend. Wait a minute, it seems that it runs a big sale every weekend. Buy one, get two free. 50% off all merchandise. There are endless permutations of the deal, but they all center on putting the store pretty much in permanent fire sale status.

I think any self-respecting brand expert would say that this is a dumb way to run a business, let alone build a reputation. The serial sale messaging blows up any claim to value beyond the immediate discount, doesn't it?

Yet the company reports that its latest quarter sales grew 10%, earnings increased 40%, and the stock price is approaching highs it hasn't seen since 2004.

We should all be so stupid.

I'm not aware that Jos. A. Bank has ever spent much time or money building its brand; to me, the store was always a Brooks Brothers knock-off, perhaps even diluting the preppy establishment thing to something pretty generic. It was the alternative store, defined by its upscale competitors, long before Men's Wearhouse, Target, or Kohl's figured out that shoppers would want to find "the look" without "the price."

It spent its time perfecting the art of getting people into its stores, and onto its web site. And getting money out of their wallets.

The business of doing this business isn't sexy, and there's little room for the moody, aspirational advertising that consumes the budgets of most other apparel retailers. There's no humor or other associative benefit attached to the brand, and I don't think the company would know a social media campaign if it fell on its CEO's head. The products are absolutely and unequivocally boring corporate wear...no interpretations, insights, or newness of design. You can't even find a flat-fronted pair of suit pants.

Which means Jos. A. Bank knows exactly what its selling, and who is doing the buying.

I've long maintained that sales and profits should be the only real measure of brand equity, not something that marketers note with an acknowledging shrug as they wax poetic about all the ephemeral things that matter before, instead of, and apart from that reality. The immediacy of sales as proof of a thriving brand is no more evident than in retailing; what's a brand worth if it's not selling stuff to customers this week, or next?

I couldn't tell you what Jos. A. Bank stands for, and I don't care. It's the brand that successfully sells generic classicISH clothing while every other business in its category is worried it can't make payroll doing the retail thing so much, er, better.  

Maybe the idea of a permanent sale isn’t so dumb after all?

The Bulb Asks:

• Is there a gap between what your customers think about your brand, and the activators of their purchase intent?  
• How much of your outbound communications is focused on prompting actions vs. educating or informing?
• Is the "permanent sale" unsustainable, or could Jos. A. Bank do it indefinitely?

Comments

[Jonathan]

Good points! I wonder if "new" still comes across as so new when it starts feeling really "old?" :)

[CincinnatiWednesday]

Quote:
"I want to keep my eyes open to the possibility that there's a smart strategy here, even if it escapes me. :)"

Maybe it's just the "New refrigerator" or "New car" theory - as in, when you need one of those items, you notice ads for them everywhere. (At one point, I was even capable of explaining Honda's double wishbone suspension!) Once the need has been filled, attention & interest wane.

Bank's strategy got you both into the store. Turns out it wasn't a good fit (pun intended!), but at least they got you to sample. If their numbers are as indicated, they're getting their share of buyers. It'll never be 100%.

[Jonathan]

Martin, my gut tells me that you're right, and I've had a similar experience in the store (I went for the great deal and just didn't find enough stuff that I wanted to buy). I was surprised when the company produced such great sales numbers, but it could definitely be benefiting from the same marketplace pressures that favor Wal-Mart and McDonald's.

I can't see how they ever get back to 'regular' pricing, nor how the incessant sale messaging stays fresh. But I want to keep my eyes open to the possibility that there's a smart strategy here, even if it escapes me. :)

[Martin Bishop]

I was lured into Jos A. Bank a while back with one of the first of its big sale offers--the buy one suit, get two free offer. In the end I didn't bite because a)I didn't need three suits and b)I couldn't find a single suit that I liked. But I was pretty close to buying and could have easily have ended up contributing to the higher sales numbers the company has reported.

Since then I've developed increasing immunity to its barrage of big-sale-emails and I'd certainly wouldn't buy something from the store anymore unless it was available at a significant discount.

So, to your question on whether the permanent sale is sustainable, I'd say it's partly an economic question (do they make enough margin at these lower prices?) and partly a marketing question (can they find a way to continue to make their big offers interesting once they've gone through every big sale permutation?).

On the marketing question, based on my own experience, I'd say "no" so I expect that sales will start to fall back, possibly below pre-big sale levels and the margin will be permanently reduced. Sometimes short term gains come at long term cost.