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UK online retailers pull back on discounting in May – with horrendous timing

Shoptalk press release_Table Talk-1

UK online retailers break their 2023 habit of discounting deeper every month and suddenly put prices back up to January highs, but do so at the exact moment consumers are the most price sensitive they have ever been

Additional observations:

? Collectors are the most price-sensitive shoppers in the UK

? Fashion buyers win the best deals

? Pet owners are the worst price negotiators

LONDON, 23rd May 2023: Nibble, the AI negotiation chatbot for ecommerce, has identified that after consistently discounting deeper every month of 2023, UK online retailers have suddenly slashed average discounts from 19% off full price in April to only 13% in May.

This is a massive 7% month-on-month price increase that returns pricing to the highs seen in January – at exactly the moment that UK consumers’ price sensitivity hits a two-year peak.

Nibble lets brands negotiate 1-1 with every customer for an instant win-win deal. Retailers can set lowest discount thresholds to control Nibble’s offers, and it is these ‘walkaway’ limits that UK retailers have suddenly decreased in May as they feel the financial pressure.

Meanwhile, Nibble’s 30,000+ monthly negotiations have revealed that these price increases are coming at exactly the same moment that UK retailers’ customers have never been more price sensitive.

In January 2023, against a backdrop of post-Christmas caution plus national strikes and political turbulence, the proportion of users’ chat comments that included discount requests, complaints of high prices or price-matching was the highest ever recorded by Nibble in its two-year history.

The three months that followed showed a recovery of confidence, but in May, price concerns have suddenly spiked again – more than double April levels and 27% higher than January’s previous peak.

 

This data is released every month in a special 30-minute live presentation – Nibble Table Talk – including what the latest negotiations with real customers show about current pricing and discounting trends, broken down by category, geography, AOV and more.

Save your spot at the next Table Talk

 

The Problem: 2023 is ‘The Year of the Finance Director’  

Rosie and Nibble

 

Rosie Bailey, CEO and
co-Founder of Nibble

“2022 was an unsustainable year. Online retailers’ focus was on growth, at almost any cost. Customer acquisition costs soared and discounting was almost out of control as retailers prioritised revenues over profit. 2023 is different. It is ‘The Year of the Finance Director’ and the global macro situation means retailers’ priority is now survival: sustained profitable growth and fiscal prudence – meaning more scrutiny and control of discounting.”

“2023 discounts grew month after month as retailers searched for revenue, until in April they were only a few percentage points shy of Christmas 2022 levels. Clearly these deep discounts did not deliver the hoped-for results and retail FDs had no choice but to pull back and increase prices. Unfortunately, the same macro economics that drove these decisions has simultaneously driven heightened price sensitivity among consumers, making for terrible timing for retailers.” 

 

Solution: Trust needs to be earned back

Rosie and Nibble

 

Rosie Bailey, CEO and
co-Founder of Nibble

“This will of course not be the last time that retailers and consumers diverge on pricing expectations. But it will become more common as macro conditions and external pressure force retailers to react unpredictably – and every time it happens, consumer trust is damaged.”

“To re-establish that trust, retailers can open up real-time AI dialogue where consumers can reveal their price expectations, retailers can defend their pricing by reinforcing their USPs and brand values in-chat, and a win-win price point can be negotiated. A special deal for the customer, a profitable sale for the retailer – both sides happy.”

 

Nibble’s 2023 data also revealed that:

 

? Collectors are the most price sensitive shoppers in the UK

Of all the industry verticals, shoppers on UK online stores for collectibles (e.g. trading cards and memorabilia) submitted the lowest opening bids, requesting 28% discounts – 12% lower than retailers’ minimum bearable discount.

? Fashion buyers win the best deals

Clothing shoppers push retailers hardest, securing deals with an average 12% discount, only 1% above the retailers’ walkaway – the tightest gap across all the retail categories.

? Pet owners are the worst price negotiators

The average opening bid submitted by shoppers on UK online pet supplies stores is exactly the same as the retailers’ lowest possible offer, giving the retailers the greatest scope for maximising profit.

 

About Nibble 

Nibble is the award-winning AI chatbot that lets brands negotiate 1-1 with every customer for an instant win-win deal to make both retailer and customer smile.

Nibble’s automated and entertaining 1-1 negotiation has been proven to more than double conversion rates, measurably improve customer engagement and preserve margins.

 

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