In the weeks leading up to Christmas the high street invariably becomes a battleground. But at the end of 2006 the stakes were raised even higher by a craze for vouchers and offers that spread virally across the web, creating further tension for major retailers. Oasis, Borders, Miss Selfridge and Next were among those brands with deals of anything between 10% and 40% off. However, the most high-profile cases, by aim or mishap, were Hamleys, Threshers and Sainsbury's in situations that appeared to catch the retailers out as customers exploited loopholes to achieve discounts of as much as 60% off (see box). While the spread of the deals was partly through viral emails that became longer and longer as people heard of new deals on a daily basis, another factor was increasing consumer awareness of sites like HotUKDeals, which brings together all coupon and money-off offers on a fully searchable website. The huge demand for such sites, and for the vouchers in general, was confirmed when it was revealed that Thresher's saw its 40%-off voucher downloaded from one South African-based site more than 800,000 times. The popularity of these money-off vouchers demonstrated the power of the internet for sharing information and the extent of viral marketing, according to Neil Mason, senior retail analyst at Mintel. "The launch of sites like HotUKDeals shows consumer hunger for getting a bargain, better deals and not having to pay full price," he says. "The UK consumer is becoming increasingly savvy and we now have a 'why pay more?' culture, hence the popularity of such discount sites and price-comparison sites like Kelkoo, Shopping.com and Pricerunner." Robert Dirskovski, head of interactive media at the Direct Marketing Association (DMA) believes people are actively looking for such deals to get back at brands. "There's a new breed of consumers who see themselves as vigilantes trying to get back at the marketing industry, as well as a proliferation of sites posting these deals," he says. "If companies make mistakes then there are consumers ready to take advantage." Staying in controlThe experiences of retailers over the Christmas period, whether good or bad, show that something needs to be done, says Mason. "The fact that Sainsbury's, Threshers and Hamleys all encountered some problems with e-vouchers prior to Christmas goes to show that there does need to be greater control and monitoring on the part of retailers when launching these online marketing campaigns," he says. "The promotions appeared to backfire." But James Roper, CEO of the Interactive Media in Retail Group (IMRG), doesn't believe more regulation is the key. "It just shows how effective the web can be as a marketing channel, and certainly doesn't warrant restrictions being put on it," he says. This is a sentiment that Richard Dodd, head of campaigns and media at the British Retail Consortium wholeheartedly agrees with. "All the comments about it going horribly wrong and that people were being able to gain massive discounts were for the most part a misunderstanding," he says. "What actually had happened was that this was a sale. Really, apart from the way it's marketed, it's in no way different to a store on the high street saying it's offering 20% off. "Normally you do that through advertising on TV, on radio, and you might put vouchers in magazines or newspapers," he continues. "So online vouchers are just a different way of marketing a sale, and obviously there are some advantages of doing it this way, such as cost." Dirskovski says that coupons have been around forever in this sector. Traditionally retailers would take out indemnity insurance so that they were prepared for more people taking up an offer than had been anticipated. "I think most big-name brands would be advised to cover themselves, but it's becoming more complicated for brands to judge because of the web," he says. "It could just go like wildfire, as we've seen. I don't think it's an issue for regulation, but for companies to work out. At the end of the day it's their bottom line." Couponstar, which runs CouponNet.co.uk, provides a service for brands rather than retailers to place money-off vouchers online. Oliver Felstead, European general manager, says that what was seen before Christmas was evidence that the sector has woken up to the effectiveness and ease of viral marketing. "What's important right now is that a lot of the people we've been talking to are saying there's a shift from brands wanting to do online marketing to actually doing it," says Felstead. "2006 became the year when people actually started dipping into their budgets." He anticipates that more retailers will embrace e-vouchers, and doesn't expect any drop-off next year, an opinion shared by the BRC's Dodd. "If anything this will only become more common," he says. Borders is one retailer that won't be scaling back on such campaigns. "This is a historic loyalty campaign that we've run every Christmas for years," said a spokeswoman. "It's not a reaction to any trading climate, but a reward for our most loyal customers, which we then allow them to pass on. The impact was phenomenal and we'll certainly continue it." But Dirskovski at the DMA isn't quite so confident. "I would be concerned about the damage being done to the image of my brand if I was to be exposed to national newspapers in this way, as well as my profit margins," he says. high-profile cases of the e-voucher craze Threshers The drinks brand offered 40% off purchases up to £500, but wasn't aware the offer had been posted on the website of South African wine company Stormhoek, where it ended up being downloaded more than 800,000 times. Hamleys The toy giant offered 20% off all stock using discount codes, but a loophole allowed customers to use the same voucher more than once. Despite reports to the contrary, Hamleys denied that it was low on stock following the glitch. Sainsbury's Discount codes allowed savings of between £2 and £12 for purchases above £60, but a flaw allowed users to use these multiple times, with reported savings of up to £43. All three brands declined to comment on the success of their pre-Christmas e-vouchers. Other brands with deals included ASOS (15% off), Gap (30% off) and Warehouse (20% off).
In the weeks leading up to Christmas the high street invariably becomes a battleground. But at the end of 2006 the stakes were raised even higher by a craze for vouchers and offers that spread virally across the web, creating further tension for major retailers.
Oasis, Borders, Miss Selfridge and Next were among those brands with deals of anything between 10% and 40% off. However, the most high-profile cases, by aim or mishap, were Hamleys, Threshers and Sainsbury's in situations that appeared to catch the retailers out as customers exploited loopholes to achieve discounts of as much as 60% off (see box).
While the spread of the deals was partly through viral emails that became longer and longer as people heard of new deals on a daily basis, another factor was increasing consumer awareness of sites like HotUKDeals, which brings together all coupon and money-off offers on a fully searchable website.
The huge demand for such sites, and for the vouchers in general, was confirmed when it was revealed that Thresher's saw its 40%-off voucher downloaded from one South African-based site more than 800,000 times.
The popularity of these money-off vouchers demonstrated the power of the internet for sharing information and the extent of viral marketing, according to Neil Mason, senior retail analyst at Mintel.
"The launch of sites like HotUKDeals shows consumer hunger for getting a bargain, better deals and not having to pay full price," he says. "The UK consumer is becoming increasingly savvy and we now have a 'why pay more?' culture, hence the popularity of such discount sites and price-comparison sites like Kelkoo, Shopping.com and Pricerunner."
Robert Dirskovski, head of interactive media at the Direct Marketing Association (DMA) believes people are actively looking for such deals to get back at brands. "There's a new breed of consumers who see themselves as vigilantes trying to get back at the marketing industry, as well as a proliferation of sites posting these deals," he says. "If companies make mistakes then there are consumers ready to take advantage."
Staying in controlThe experiences of retailers over the Christmas period, whether good or bad, show that something needs to be done, says Mason. "The fact that Sainsbury's, Threshers and Hamleys all encountered some problems with e-vouchers prior to Christmas goes to show that there does need to be greater control and monitoring on the part of retailers when launching these online marketing campaigns," he says. "The promotions appeared to backfire."
But James Roper, CEO of the Interactive Media in Retail Group (IMRG), doesn't believe more regulation is the key. "It just shows how effective the web can be as a marketing channel, and certainly doesn't warrant restrictions being put on it," he says.
This is a sentiment that Richard Dodd, head of campaigns and media at the British Retail Consortium wholeheartedly agrees with. "All the comments about it going horribly wrong and that people were being able to gain massive discounts were for the most part a misunderstanding," he says. "What actually had happened was that this was a sale. Really, apart from the way it's marketed, it's in no way different to a store on the high street saying it's offering 20% off.
"Normally you do that through advertising on TV, on radio, and you might put vouchers in magazines or newspapers," he continues. "So online vouchers are just a different way of marketing a sale, and obviously there are some advantages of doing it this way, such as cost."
Dirskovski says that coupons have been around forever in this sector. Traditionally retailers would take out indemnity insurance so that they were prepared for more people taking up an offer than had been anticipated. "I think most big-name brands would be advised to cover themselves, but it's becoming more complicated for brands to judge because of the web," he says. "It could just go like wildfire, as we've seen. I don't think it's an issue for regulation, but for companies to work out. At the end of the day it's their bottom line."
Couponstar, which runs CouponNet.co.uk, provides a service for brands rather than retailers to place money-off vouchers online. Oliver Felstead, European general manager, says that what was seen before Christmas was evidence that the sector has woken up to the effectiveness and ease of viral marketing.
"What's important right now is that a lot of the people we've been talking to are saying there's a shift from brands wanting to do online marketing to actually doing it," says Felstead. "2006 became the year when people actually started dipping into their budgets."
He anticipates that more retailers will embrace e-vouchers, and doesn't expect any drop-off next year, an opinion shared by the BRC's Dodd. "If anything this will only become more common," he says.
Borders is one retailer that won't be scaling back on such campaigns. "This is a historic loyalty campaign that we've run every Christmas for years," said a spokeswoman. "It's not a reaction to any trading climate, but a reward for our most loyal customers, which we then allow them to pass on. The impact was phenomenal and we'll certainly continue it."
But Dirskovski at the DMA isn't quite so confident. "I would be concerned about the damage being done to the image of my brand if I was to be exposed to national newspapers in this way, as well as my profit margins," he says.
high-profile cases of the e-voucher craze Threshers The drinks brand offered 40% off purchases up to £500, but wasn't aware the offer had been posted on the website of South African wine company Stormhoek, where it ended up being downloaded more than 800,000 times.
Hamleys The toy giant offered 20% off all stock using discount codes, but a loophole allowed customers to use the same voucher more than once. Despite reports to the contrary, Hamleys denied that it was low on stock following the glitch.
Sainsbury's Discount codes allowed savings of between £2 and £12 for purchases above £60, but a flaw allowed users to use these multiple times, with reported savings of up to £43.
All three brands declined to comment on the success of their pre-Christmas e-vouchers. Other brands with deals included ASOS (15% off), Gap (30% off) and Warehouse (20% off).
Robin Grant
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