How to run an EOFY sale — without selling out your brand
Deep sales can change the way customers approach retailers, and build the perception that sooner or later, full-priced stock will face hefty discounts.
As shoppers battle the rising cost of living, end of financial year (EOFY) sales let customers secure a bargain — and give retailers the perfect opportunity to offload stock before the new tax year.
But deep sales can change the way customers approach retailers, and build the perception that sooner or later, the full-priced stock will face hefty discounts.
That’s the view of independent brand counsel Michel Hogan, who has advised retailers to think carefully about what their sales strategy telegraphs to customers, both now and in the future.
Speaking to SmartCompany in the depths of EOFY sales season, Hogan said a “drumbeat” of constant sales activities can condition customers to expect deep discounts on a regular basis.
However, there are ways for brands to meaningfully tap into the sales period, without diminishing the core aspects of their brand.
Constant discounts risk sales burnout
The 2023-2024 financial year has been difficult for consumers and small businesses alike, as persistent inflation and the interest rates designed to curb those cost increases have suppressed discretionary spending.
Now, the EOFY sales period represents a chance for shoppers to spend on goods they couldn’t justify at full price.
The Australian Retailers Association (ARA) and Roy Mogan predict shoppers will spend $10.1 billion through the EOFY sales period, an 8.6% increase on the year prior.
Much of the projected increase is due to rising population numbers, the ARA said.
However, the ARA said shoppers are more likely to increase or maintain their EOFY sale spending levels in 2024 than pull back from their 2023 spending, suggesting serious hunger for a bargain.
With shoppers poised to open their wallets, small businesses — many of which have been struggling themselves — have the potential to woo customers through targeted discounts.
It is not hard to see the appetite for EOFY sales among retailers, with many small businesses now offering cut-price goods and services for the first time in years, if ever.
Yet offering a heavy sale, especially if the business is a frequent discounter, can carry hidden costs.
“More and more, sales are anchored to calendar events,” Hogan said.
“So you end up with the end of financial year sale, a Valentine’s Day, a Mother’s Day sale.
“It becomes a drumbeat through the year of big event sales, which can be really insidious for small businesses.
“It kind of resets your customers into that mode of, ‘Well, I want that thing but there’s going to be a sale in a month so I’m going to wait.’”
Brands should consider if offering yet another sale is in keeping with their overall image and the perception they want customers to hold, she said, as brand cachet is difficult to regain.
“I think you’re always going to be most successful if you tap into what people love about you in the first place,” Hogan said.
“If the way you talk about your products, what you make, is usually tied to the quality of the production and the fact that they’re really top of the line, then don’t all of a sudden pivot and sacrifice that by saying, ‘Going cheap, now!’”
Genuine connections to EOFY a plus
Brands should also consider the specific nature of EOFY before committing to discounts, Hogan continued.
Historically, EOFY sales have been a boon for retailers offering products and services that customers can claim as a tax deduction from July 1.
This attachment to work-related purchases has diminished somewhat in recent years.
According to a new survey conducted by PayPal, 51% of EOFY sale shoppers intend to splurge on clothing or fashion, followed by 31% who wish to spend on electronics, and 26% eyeing homewares and garden goods.
A comparatively paltry 12% of consumers say they will specifically shop for tax-deductible items.
Even so, leaning into tax benefits is still worthwhile for small businesses looking to authentically engage with the sales period.
“The first thing would be to make sure that you have a genuine connection to the end of financial year,” Hogan said.
“If the products that you’re selling aren’t anything that people are going to be able to take advantage of as part of an expenses claim, or as part of the end-of-tax-year claim, then why are you doing an end of financial year sale?”
An alternative would be formulating your own sale period, detached from any familiar date on the calendar, she said.
Maintain your brand’s personality
But what about the brands desperate to delve into the EOFY sales period, whose products don’t fit the traditional tax-deductible mold?
“Even within a sale environment, there’s still an opportunity to reinforce [your brand] with people through any number of small little actions and decisions,” Hogan said.
“Let’s just say you’re a business that attempts to use a bit of humor in how you communicate with your customers. Just because it’s an end of financial year sale, you don’t have to give that away.
“You always add a little bit of a special touch or something to the experience that people have when they receive your product.”
For many struggling small businesses, an EOFY sale may be necessary to maintain cash flow.
However, operators should attempt to retain their brand’s personality, even as they change their prices.
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