Fashion discounting pays, the latest research from reveals

While discounting strategies are often blamed for depleting fashion retailer’s already slim margins, markdowns can drive brand discovery among shoppers, grow ambient sales and increase long-term loyalty, the latest research from, the leader in SaaS Artificial Intelligence (AI) demand forecasting solutions, reveals.

Online fashion sales are expected to overtake High Street revenues for the first time by 2022, three years ahead of pre-pandemic predictions, according to Retail Economics latest study. However, whilst the pandemic prompted a sustained acceleration to online fashion, with digital sales rising to £2.7bn, up 19% year-on-year in 2020, it still wasn’t enough to prevent an overall drop in apparel sales for 2020 of £9.6bn.  This prompted many apparel retailers to turn to discounting strategies to stimulate demand, as pricing sensitivity amongst fashion shoppers intensified; original research of over 2,000 UK shoppers by showed over half (54%) of UK consumers have become more price sensitive when it came to fashion purchases since the start of the pandemic.

As new cohorts of shoppers migrate online and discover new brands for the first time, discounting plays an increasingly important role in consumers’ discovery and can be a gateway to trying new brands.  Six in ten (60%) said they would be more likely to try clothing ranges from new retailers when they are marked down, allowing them to try out new brands and styles, while 79% of shoppers who tried new fashion brands during the pandemic said they would remain loyal to these retailers post-pandemic.

And discounting doesn’t just drive on-off sales;’s data reveals it can grow longer-term revenue opportunities and customer lifetime value (CLV), creating a halo-effect from the original discount.  Over half (54%) of shoppers it polled who had bought a garment when it was discounted then went on to buy additional items at full price.  Equally, markdowns can also prompt ambient sales opportunities, with 46% of UK shoppers saying they bought an item of clothing on discount, they were more likely to add other full priced garments into their shopping cart.

However, 23% said they were more likely to be put off buying clothing when it was marked down and half said that if they were already loyal to a brand, being given a discount wouldn’t sway their decision; 50% said if they loved a particular brand they would buy apparel from it regardless of whether or not a discount was being offered.

Yogesh, Kulkarni, co-CEO at, commented: “So often, discounting becomes a delicate balancing act – while retailers want to stimulate demand, they don’t want to needlessly wipe off margin from their already squeezed bottom line.  While some discounting can drive add on sales opportunities, acting as a gateway for consumer to try out – and come back to – new brands, retailers need to strategically assess when – and, indeed, if – a discount is in fact needed to drive a conversion.  And that means intelligently optimising markdowns and promotions, based on data and demand triggers, to increase sell-through and protect margins, whilst delivering the discounts shoppers now expect.”

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